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[Federal Register Volume 74, Number 164 (Wednesday, August 26, 2009)]
[Notices]
[Pages 43178-43182]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-20537]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60527; File No. SR-NYSEArca-2009-45]

Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting 
Approval of a Proposed Rule Change as Modified by Amendment No. 1 
Thereto To Adopt Rules Implementing the Options Order Protection and 
Locked/Crossed Market Plan

August 18, 2009.

I. Introduction

    On May 20, 2009, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
amend and adopt rules to implement the Options Order Protection and 
Locked/Crossed Market Plan. The proposed rule change was published for 
comment in the Federal Register on June 12, 2009.\3\ On July 12, 2009, 
the Exchange filed Amendment No. 1 to the

[[Page 43179]]

proposed rule change.\4\ The Commission received no comments on the 
proposal. This order approves the proposed rule change, as modified by 
Amendment No. 1.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 60054 (June 5, 
2009), 74 FR 28078 (``Notice'').
    \4\ Amendment No. 1 clarified that this proposed rule change 
will become effective upon the Exchange's withdrawal from the Plan 
for the Purpose of Creating and Operating an Intermarket Option 
Linkage and the effectiveness of the Options Order Protection and 
Locked/Crossed Market Plan. In addition, Amendment No. 1 revised 
Proposed NYSE Arca Rule 6.95(b) to delete the last sentence which 
stated, in reference to the proposed locked/crossed market exception 
for non-customer quotes, that the ``exemption is operative as long 
as the Exchange identifies the presence of Customer orders in its 
disseminated bid or offer'' because the sentence was not included in 
similar rules of other exchanges. Because the amendment provided 
clarification and revised the Exchange's proposed locked and crossed 
market rule in a non-substantive manner to conform with similar 
proposed rules of other exchanges, the amendment did not require 
notice and comment.
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II. Description of the Proposal

    The Exchange proposes to amend and adopt new NYSE Arca rules to 
implement the Options Order Protection and Locked/Crossed Market Plan 
(``Plan'').\5\ Specifically, the Exchange proposes to amend and/or 
replace NYSE Arca Rules 6.92 through 6.96 with new rules implementing 
the Plan, amend other Exchange rules to reflect the Plan, and delete 
rules rendered unnecessary by the Plan.
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    \5\ The Plan is a national market system plan proposed by the 
seven existing options exchanges and approved by the Commission. See 
Securities Exchange Act Release No. 59647 (March 30, 2009), 74 FR 
15010 (April 2, 2009) (File No. 4-546) (``Plan Notice'') and 60405 
(July 30, 2009), 74 FR 39362 (August 6, 2009) (File No. 4-546) 
(``Plan Approval''). The seven options exchanges are: Chicago Board 
Options Exchange, Incorporated (``CBOE''); International Securities 
Exchange, LLC (``ISE''); The NASDAQ Stock Market LLC (``Nasdaq''); 
NASDAQ OMX BX, Inc. (``BOX''); NASDAQ OMX PHLX, Inc. (``Phlx''); 
NYSE Amex LLC (``NYSE Amex''); and NYSE Arca (each exchange 
individually a ``Participant'' and, together, the ``Participating 
Options Exchanges'').
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The Old Plan

    Each of the Participating Options Exchanges are signatories to the 
Plan for the Purpose of Creating and Operating an Intermarket Option 
Linkage (``Old Plan'').\6\ In pertinent part, the Old Plan generally 
requires its participants to avoid trading at a price inferior to the 
national best bid or offer (``trade-through''), although it provides 
for a number of exceptions to trade-through liability.\7\ The 
Participating Options Exchanges comply with this requirement of the Old 
Plan by utilizing a stand alone system (``Linkage Hub'') to send and 
receive specific order types,\8\ namely Principal Acting as Agent 
Orders (``P/A Orders''), Principal Orders, and Satisfaction Orders.\9\ 
The Old Plan also provided that dissemination of ``locked'' or 
``crossed'' markets should be avoided, and remedial actions that should 
be taken to unlock or uncross such market.\10\ Each of the 
Participating Options Exchanges, including the Exchange, has submitted 
an amendment to the Old Plan to withdraw from such Plan.\11\ The 
withdrawals will be effective upon approval by the Commission of such 
amendments pursuant to Rule 608 of Regulation NMS under the Act 
(``Regulation NMS'').\12\
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    \6\ On July 28, 2000, the Commission approved the Old Plan as a 
national market system plan for the purpose of creating and 
operating an intermarket options market linkage proposed by the 
American Stock Exchange LLC (n/k/a NYSE Amex), CBOE, and ISE. See 
Securities Exchange Act Release No. 43086 (July 28, 2000), 65 FR 
48023 (August 4, 2000). Subsequently, Philadelphia Stock Exchange, 
Inc. (n/k/a Phlx), Pacific Exchange, Inc. (n/k/a NYSE Arca), Boston 
Stock Exchange, Inc. (n/k/a BOX), and Nasdaq joined the Linkage 
Plan. See Securities Exchange Act Release Nos. 43573 (November 16, 
2000), 65 FR 70851 (November 28, 2000); 43574 (November 16, 2000), 
65 FR 70850 (November 28, 2000); 49198 (February 5, 2004), 69 FR 
7029 (February 12, 2004); and 57545 (March 21, 2008), 73 FR 16394 
(March 27, 2008).
    \7\ Section 8(c) of the Old Plan.
    \8\ The Linkage Hub is a centralized data communications network 
that electronically links the Participating Options Exchanges to one 
another. The Options Clearing Corporation (``OCC'') operates the 
Linkage Hub.
    \9\ Section 2(16) of the Old Plan.
    \10\ Section 7(a)(i)(C) of the Old Plan.
    \11\ See Securities Exchange Act Release No. 60360 (July 21, 
2009) 74 FR 37265 (July 28, 2009) (File No. 4-429).
    \12\ 17 CFR 242.608.
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The Plan

    The Plan does not require a central linkage mechanism akin to the 
Old Plan's Linkage Hub. Instead, the Plan includes the framework for 
routing orders via private linkages that exist for NMS stocks under 
Regulation NMS.\13\ The Plan requires the Participating Options 
Exchanges to adopt rules ``reasonably designed to prevent Trade-
Throughs.'' \14\ Participating Options Exchanges are also required to 
conduct surveillance of their respective markets on a regular basis to 
ascertain the effectiveness of the policies and procedures to prevent 
Trade-Throughs and to take prompt action to remedy deficiencies in such 
policies and procedures.\15\ As further described below, the Plan 
incorporates a number of exceptions to trade-through liability.\16\ 
Some of these exceptions are carried over from the Old Plan, including 
exceptions for trading rotations, non-firm quotes, and complex 
trades.\17\ Others are substantially similar to exceptions available 
for NMS stocks under Regulation NMS, such as exceptions for systems 
issues, crossed markets, quote flickering, customer stopped orders, 
benchmark trades and, notably, intermarket sweep orders (``ISOs'').\18\ 
In addition, the Plan contains a new exception for stopped orders and 
price improvement.\19\
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    \13\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37496 (June 29, 2005) (File No. S7-10-04); 17 CFR 
242.600 et seq. For discussions of the similarities between the 
provisions of Regulation NMS and the provisions in the Plan, see the 
Plan Notice and Plan Approval, supra note 5.
    \14\ Under the Plan, a ``Trade-Through'' is generally defined as 
a transaction in an option series, either as principal or agent, at 
a price that is lower than a Protected Bid or higher than a 
Protected Offer.'' See Section 2(21) of the Plan. A ``Protected 
Bid'' and ``Protected Offer'' generally means a bid or offer in an 
option series, respectively, that is displayed by a Participant, is 
disseminated pursuant to the Options Price Reporting Authority 
(``OPRA'') Plan, and is the Best Bid or Best Offer. See Section 
2(17) of the Plan. A ``Best Bid'' or ``Best Offer'' means the 
highest bid price and the lowest offer price. Section (2)(1) of the 
Plan. ``Protected Bid'' and ``Protected Offer,'' together are 
referred to herein as ``Protected Quotation.'' See Section 2(18) of 
the Plan.
    \15\ Section 5(a)(ii) of the Plan.
    \16\ Section 5(b) of the Plan.
    \17\ Subparagraphs (ii), (vii), and (viii), respectively, of 
Section 5(b) of the Plan.
    \18\ Subparagraphs (i), (iii), (vi), (ix), (xi), and (iv)-(v), 
respectively, of Section 5(b) of the Plan.
    \19\ Subparagraph (x) of Section 5(b) of the Plan.
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    The Plan also requires each Participant to establish, maintain, and 
enforce written rules that: require its members reasonably to avoid 
displaying locked and crossed markets; assure the reconciliation of 
locked and crossed markets; and prohibit its members from engaging in a 
pattern or practice of displaying locked and crossed markets; subject 
to exceptions as may be contained in the rules of the Participant, as 
approved by the Commission.\20\
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    \20\ Section 6 of the Plan. The Plan also contains provisions 
relating to the operation of the Plan including, for example, 
provisions relating to the entry of new parties to the Plan; 
withdrawal from the Plan; and amendments to the Plan.
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The Exchange's Proposal

    To implement the Plan, the Exchange proposes to replace its current 
rules relating to the Old Plan with new rules relating to the Plan, and 
makes amendments to other rules as necessary to conform to the 
requirements of the Plan.\21\ As such, the Exchange proposes to adopt 
all applicable definitions from the Plan into the Exchange's rules.\22\
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    \21\ A more detailed description of the Exchange's proposed rule 
change may be found in the Notice, supra, note 3.
    \22\ Proposed NYSE Arca Rule 6.92.
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    In addition, the Exchange proposes to prohibit its members from 
effecting Trade-Throughs, unless an exception applies.\23\ Consistent 
with the Plan, the Exchange also proposes exceptions to the prohibition 
on trade throughs relating to: System issues; trading

[[Page 43180]]

rotations; crossed markets; intermarket sweep orders; quote flickering; 
non-firm quotes; complex trades; customer stopped orders; stopped 
orders and price improvement; and benchmark trades.\24\
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    \23\ Proposed NYSE Arca Rule 6.94(a).
    \24\ Proposed NYSE Arca Rule 6.94(b)(1)-(10). In addition, the 
Exchange proposes to add ISOs as a new type of order under proposed 
NYSE Arca Rule 6.62(z).
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    The Exchange also proposes a rule to address locked and crossed 
markets, as required by the Plan.\25\ Specifically, the Exchange 
proposes that, except for quotations that fall within a stated 
exception, members shall reasonably avoid displaying, and shall not 
engage in a pattern or practice of displaying, any quotations that lock 
or cross a Protected Quote.\26\
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    \25\ A ``locked market'' is defined as a quoted market in which 
a Protected Bid is equal to a Protected Offer. Proposed NYSE Arca 
Rule 6.92(a)(9). A ``crossed market'' is defined as a quoted market 
in which a Protected Bid is higher than a Protected Offer. Proposed 
NYSE Arca Rule 6.92(a)(5).
    \26\ Proposed NYSE Arca Rule 6.95(a).
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    The Exchange proposes four exceptions to the prohibition against 
locked and crossed markets: When the Exchange is experiencing a 
failure, material delay, or malfunction of its systems or equipment; 
when the locking or crossing quotation was displayed at a time where 
there is a crossed market; when an Exchange member simultaneously 
routes an ISO to execute against the full displayed size of any locked 
or crossed Protected Bid or Protected Offer; and, with respect to a 
locking quotation, when the order entered on the Exchange that will 
lock a Protected Bid or Protected Offer, is (i) not a customer order, 
and the Exchange can determine via identification available pursuant to 
the OPRA Plan that such Protected Bid or Protected Offer does not 
represent, in whole or in part, a customer order; or (ii) a customer 
order, and the Exchange can determine via identification available 
pursuant to the OPRA Plan that such Protected Bid or Protected Offer 
does not represent, in whole or in part, a customer order, and, on a 
case-by-case basis, the customer specifically authorizes the member to 
lock such Protected Bid or Protected Offer.\27\ The Exchange believes 
that, in most cases, locked market maker quotes are good for the 
investing public, but recognizes that the benefits of a locked market 
become more complicated when one or both of the locking quotations 
represent a customer order. Where there is market interest willing to 
trade with a customer, the Exchange believes that the customer order 
should be filled. Thus, the Exchange proposes that it would not exempt 
from the locked market prohibition situations involving customer orders 
unless the customer entering the locking order specifically authorizes 
the lock on a case-by-case basis.\28\ As a result, its members would 
not be permitted to lock another Participant's quotation unless the 
Exchange can establish that the quotation on the other Participant's 
market is not for the account of a customer.
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    \27\ Proposed NYSE Arca Rule 6.95(b)(1)-(4).
    \28\ NYSE Arca noted that it can envision a customer authorizing 
a lock when the fees associating with trading against the locked 
market make the execution price uneconomical to the customer. See 
Notice, supra note 3 at 28080.
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    The Exchange also proposes rules to permit it to continue to accept 
P/A Orders and Principal Orders from Participating Options Exchanges 
that are not able to send ISOs in order to avoid Trade-Throughs.\29\ 
The Exchange noted that, even upon the approvals of the Plan and the 
implementing rules of the various Participating Options Exchanges, it 
is possible that not all the Participants will be functionally able to 
operate pursuant to the Plan. Thus, the Exchange has proposed to retain 
certain rules governing the receipt of P/A Orders and Principal Orders 
until such time that all Participating Options Exchanges are operating 
pursuant to the Plan.
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    \29\ Proposed NYSE Arca Temporary Rule 6.96.
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    The Exchange also proposes to delete certain provisions of NYSE 
Arca rules to reflect the Exchange's withdrawal from the Old Plan.\30\ 
Finally, the Exchange proposes to amend NYSE Arca Rule 10.12, the 
Exchange's Minor Rule Plan, to replace references to the Old Plan with 
references to the Plan.
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    \30\ See Notice, supra note 3 at 28080-81, discussing proposed 
changes to NYSE Arca Rule 6.33, Commentaries .02-.04 to NYSE Arca 
Rule 6.35, and NYSE Arca Rule 6.76A.
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II. Discussion and Commission's Findings

    After careful review, the Commission finds that the proposed rule 
change, as amended, is consistent with the requirements of the Act and 
the rules and regulations thereunder applicable to a national 
securities exchange.\31\ In particular, the Commission finds that the 
proposal is consistent with Section 6(b)(5) of the Act \32\ which 
requires, among other things, that the rules of a national securities 
exchange be 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 Commission also finds that the 
proposal is consistent with Rule 608(c) of Regulation NMS under the 
Act, which requires that each exchange comply with the terms of any 
effective national market system plan of which it is a participant.\33\ 
Finally, the Commission finds that the proposed rule change is 
consistent with the requirements of the Plan.\34\
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    \31\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \32\ 15 U.S.C. 78f(b)(5).
    \33\ 17 CFR 242.608(c). Section 1 of the Plan provides in 
pertinent part that, ``The Participants will submit to the 
[Commission] for approval their respective rules that will implement 
the framework of the Plan.''
    \34\ See supra note 5.
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    Proposed NYSE Arca Rule 6.92 would define applicable terms in a 
manner that are substantively identical to the defined terms of the 
Plan. As such, the Commission finds that proposed amendments to NYSE 
Arca Rule 6.92 are consistent with the Act and the Plan.
    Proposed NYSE Arca Rule 6.94(a) would prohibit members from 
effecting Trade-Throughs unless an exception applies. Proposed NYSE 
Arca Rule 6.94(b) would provide for ten exceptions to the general 
Trade-Through prohibition, relating to systems issues, trading 
rotations, crossed markets, ISOs, quote flickering, non-firm quotes, 
complex trades, customer stopped orders, stopped orders and price 
improvement, and benchmark trades.\35\ Aside from the proposed 
exception relating to systems issues, each proposed exception would be 
substantively identical to the parallel exception under Section 5(b) of 
the Plan.
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    \35\ Proposed NYSE Arca Rule 6.94(b)(1)-(10).
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    The systems issues exception under proposed NYSE Arca Rule 
6.94(b)(1) would implement the parallel exception available under 
Section 5(b)(i) of the Plan and would permit the Exchange to bypass the 
Protected Quotation of another Participant if such other Participant 
repeatedly fails to respond within one second to incoming orders 
attempting to access its Protected Quotations. The Exchange's rule 
would require the Exchange to notify such non-responding Participant 
immediately after (or at the same time as) electing self-help, and 
assess whether the cause of the problem lies with the Exchange's own 
systems and, if so, take immediate steps to resolve the problem. 
Finally, the Exchange would be required to promptly document its 
reasons supporting any such determination to bypass a Protected 
Quotation. The Commission believes that this exception should provide 
the Exchange with the

[[Page 43181]]

necessary flexibility for dealing with problems that occur on an away 
market during the trading day. At the same time, the exception's 
requirements to immediately notify such away market of its 
determination and also assess its own system should help prevent the 
use of this exception when there in fact is a problem with the 
Exchange's own systems, rather than those of an away market.
    The Commission notes that included among the exception in proposed 
NYSE Arca Rule 6.94(b) would be an exception for certain transactions 
involving ISOs.\36\ An order identified as an ISO would be immediately 
executable by the Exchange (or any other Plan Participant that received 
such an order) based on the premise that the market participant sending 
the ISO has already attempted to access all better-priced Protected 
Quotations up to their displayed size. The Commission believes that 
this exception should help ensure more efficient and faster executions 
in the options markets.
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    \36\ Proposed NYSE Arca Rule 6.94(b)(4).
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    The Commission notes that, in addition to these rules regarding 
Trade-Throughs, the Plan requires that each Participant establish, 
maintain and enforce written policies and procedures that are 
reasonably designed to prevent Trade-Throughs in that Participant's 
market that do not fall within an applicable exception and, if relying 
on such exception, that are reasonably designed to assure compliance 
with the terms of the exception. In addition, the Commission notes that 
the Plan requires each Participant to conduct surveillance of its 
market on a regular basis to ascertain the effectiveness of such 
policies and procedures and to take prompt action to remedy any 
deficiencies in such policies and procedures.
    Accordingly, the Commission finds that proposed NYSE Arca Rule 6.94 
is consistent with Section 5 of the Plan and Section 6(b)(5) of the Act 
\37\ which requires, among other things, that the rules of a national 
securities exchange be 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.
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    \37\ 15 U.S.C. 78f(b)(5).
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    Proposed NYSE Arca Rule 6.95(a) would require Exchange members to 
reasonably avoid displaying, and not engage in a pattern or practice of 
displaying, any quotation that locks or crosses a Protected Quotation, 
subject to certain exceptions delineated in proposed NYSE Arca Rule 
6.95(b). The Commission recognizes that locked and crossed markets may 
occur accidentally and cannot always be avoided. However, the 
Commission believes that giving priority to the first-displayed 
Protected Bid or Protected Offer, particularly when it includes a 
public customer's order, will encourage price discovery and contribute 
to fair and orderly markets. Therefore, the Commission believes that 
the proposed rule, which corresponds to the Plan's language, to require 
members to reasonably avoid displaying, and not engaging in a pattern 
or practice of, locks and crosses is appropriate.
    Proposed NYSE Arca Rule 6.95(b) would permit four exceptions to the 
Exchange's general rule relating to locked and crossed markets.\38\ The 
first three would be similar to analogous certain trade-through 
exceptions under proposed NYSE Arca Rule 6.94(b), and relate to when 
the Exchange is experiencing systems issues, when there is exists a 
crossed market, and when a member simultaneously routes ISOs against 
the full displayed size of any locked or crossed Protected Bid or 
Protected Offer.
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    \38\ Section 6 of the Plan permits exceptions to the Plan's 
locked and crossed market rules as may be contained in the rules of 
a Participant approved by the Commission.
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    The fourth exception would permit an order entered onto the 
Exchange to lock a Protected Bid or Protected Offer when such order is: 
(1) not a customer order, and the Exchange can determine that such 
Protected Bid or Protected Offer does not represent, in whole or in 
part, a customer order; or (2) a customer order, and the Exchange can 
determine that such Protected Bid or Protected Offer does not 
represent, in whole or in part, a customer order and, on a case-by-case 
basis, the customer specifically authorizes the Exchange's member to 
lock such Protected Bid or Protected Offer. This exception would not 
protect a market maker quote or broker-dealer order from being locked.
    The Commission believes that the Exchange's proposed rules relating 
to locked and crossed markets are consistent with the Plan and the Act 
and should help ensure that the display of locked or crossed markets 
will be limited and that any such display will be promptly reconciled. 
The Commission also believes that each of the proposed exceptions to 
locked and crossed markets relate to circumstances when it is 
appropriate to permit a limited, narrow exception to the general locked 
and crossed market rule.
    In particular, the Commission believes that the fourth exception is 
appropriate because it would protect customer orders that are Protected 
Bids or Protected Offers from being locked, and would only permit a 
customer order entered on to the Exchange to lock a Protected Bid or 
Protected Offer when a customer specifically authorizes an Exchange 
member, and only when such Protected Bid or Protected Offer itself does 
not represent, in whole or in part, a customer order. Because of the 
rapidity with which options quotes are often updated today, 
particularly in response to changes in the underlying, there is an 
increasing likelihood that market maker quotations will lock each 
other. The proposed exception accounts for this dynamic by not 
prohibiting such locking instances. Importantly, the proposed exception 
in the Exchange's rules that the Commission is approving would allow 
non-customer orders to lock an away market's Protected Quotation only 
if the Exchange is able to affirmatively determine that the Protected 
Quotation on the away market is not, in whole or in part, for the 
account of a customer. If any portion of such away market's Protected 
Quotation is for the account of a customer, such Protected Quotation 
may not be locked. In addition, the Commission notes that the rule 
requires that such determination be made via identification available 
pursuant to the OPRA Plan, which is working with the participating 
options exchanges on a method to so identify customer quotations 
through OPRA. The Exchange has represented that, absent the ability to 
identify a customer quote as part of an exchange's BBO, the Exchange 
would assume that the quote represents, in whole or in part, a customer 
order. As such, the Exchange has represented that it would not permit 
its members to avail themselves of this exemption unless the away 
market has informed the Exchange that it would designate all customer 
orders as such in OPRA and such exchange's quotation does not contain 
such designation. Finally, the Exchange has represented that if an 
exchange chooses not to identify its customer quotations, the Exchange 
would treat all of such exchange's quotations as customer orders and, 
absent application of another exception, would not permit locks of such 
quotations.
    Therefore, the Commission finds that Exchange's rule regarding 
locked and crossed markets appropriately implements Section 6 of the 
Plan, and is consistent with Section 6(b)(5) of the

[[Page 43182]]

Act \39\ which requires, among other things, that the rules of a 
national securities exchange be 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.
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    \39\ 15 U.S.C. 78f(b)(5).
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    The Commission also finds that proposed NYSE Arca Temporary Rule 
6.96, which facilitates the participation of certain Participating 
Options Exchanges who may require the use of P/A Orders and Principal 
Orders after implementation of the Plan, is consistent with the Act. 
Although the Commission has already approved the Plan,\40\ the 
Commission also recognizes that there may be one or more Participating 
Options Exchanges that may require a temporary transition period during 
which they may want to continue to utilize these order types that exist 
currently under the Old Plan.\41\ The Exchange and each of the other 
Participating Options Exchanges have proposed substantially identical 
temporary provisions to accommodate this possibility.\42\ Thus, the 
Commission finds that the proposed rule relating to the Exchange's 
receipt and handling of P/A Orders and Principal Orders, and imposing 
certain obligations on the Exchange with respect to such orders that 
are similar to those that exist under the Old Plan, is appropriate and 
consistent with Section 6(b)(5) of the Act \43\ which requires, among 
other things, that the rules of a national securities exchange be 
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.
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    \40\ See Plan Approval, supra, note 5.
    \41\ The Commission notes that any Participating Options 
Exchange that wishes to utilize such order types in a manner that 
would result in a Trade-Through would need to separately request an 
exemption from the Plan for such use.
    \42\ The Commission notes that the rules contained in NYSE Arca 
Temporary Rule 6.96 are not required by the Plan, but rather are 
rules proposed by the Exchange in order to facilitate the 
participation in the Plan of certain exchanges during an initial 
transition period.
    \43\ 15 U.S.C. 78f(b)(5).
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    Finally, the Commission finds that NYSE Arca's other proposed 
changes, including the proposed modifications to NYSE Arca Rule 6.33, 
Commentary .02-.04 to NYSE Arca Rule 6.35, NYSE Arca Rule 6.76.A, and 
NYSE Arca Rule 10.12 are appropriate and consistent with the Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\44\ that the proposed rule change (SR-NYSEArca-2009-45), as 
modified by Amendment No. 1, be, and it hereby is, approved.
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    \44\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\45\
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    \45\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-20537 Filed 8-25-09; 8:45 am]
BILLING CODE 8010-01-P
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