46272 Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Notices 

11 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 1.1(n). 

4See NYSE Arca Equities Rule 6.3. 

5See NYSE Arca Equities Rule 6.16: ‘‘No ETP 

Holder may accept and hold an unexecuted limit 

order from its customer * * * and continue to trade 

on the Corporation the subject security for its own 

account at prices that would satisfy the customer’s 

limit order without executing that limit order.’’ 

6See NYSE Arca Equities Rule 6.6: ‘‘An ETP 

Holder or associated person obtaining information 

of an immediate pending transaction or a 

transaction executed but not yet reported on any 

national securities exchange or association 

involving 5,000 shares or more of a security 

including an equivalent number of option contracts 

admitted to dealings on the NYSE Arca, Inc., or 

securities underlying the options so admitted, shall 

not initiate or transmit an order in the security 

involved, or options relating to that security, 

through the facilities of the Corporation for any 

account in which he or she or his or her 

organization are participants until after the 

transaction appears on the ticker or is otherwise 

disclosed, in the case of orders pertaining to 

equities, or until two minutes after such disclosure, 

in the case of orders pertaining to options. 

Exceptions will require prior approval from the 

Corporation.’’ 

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 No. 

SR–BX–2009–056 and should be 

submitted on or before September 29, 

2009.11

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–21643 Filed 9–4–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60604; File No. SR– 

NYSEArca–2009–78] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and Order 

Granting Accelerated Approval of a 

Proposed Rule Change Eliminating 

NYSE Arca Equities Rule 7.26, Adding 

New NYSE Arca Equities Rule 6.7 and 

Amending NYSE Arca Equities Rule 

6.18 

September 1, 2009. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on August 

25, 2009, NYSE Arca, Inc. (‘‘NYSE 

Arca’’ or the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by NYSE Arca. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons and is 

approving the proposed rule change on 

an accelerated basis. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to (i) 

eliminate the requirement of NYSE Arca 

Equities Rule 7.26 that Market Makers 

establish and maintain certain 

specifically prescribed information 

barriers, (ii) add new NYSE Arca 

Equities Rule 6.7 regarding trading 

ahead of research reports, and (iii) 

revising NYSE Arca Equities Rule 6.18 

to incorporate compliance with NASD 

Rule 3010. The text of the proposed rule 

change is attached as Exhibit 5 to the 

19b–4 form. A copy of this filing is 

available on the Exchange’s Web site at 

http://www.nyse.com, at the Exchange’s 

principal office and at the Commission’s 

Public Reference Room. 

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 III 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 eliminate 

the requirement set forth in NYSE Arca 

Equities Rule 7.26 that Market Makers 

on the Corporation maintain certain 

specifically prescribed information 

barrier procedures. At the same time, 

the Exchange further proposes new 

NYSE Arca Equities Rule 6.7, which (i) 

prohibits ETP Holders from trading 

ahead of research reports and (ii) 

requires each ETP Holder to establish, 

maintain and enforce procedures 

regarding the flow of information 

between research department personnel 

and trading department personnel. 

Finally, the Exchange proposes to revise 

NYSE Arca Equities Rule 6.18 to 

incorporate compliance with NASD 

Rule 3010. 

All Members Must Maintain Policies 

Concerning the Misuse of Material NonPublic Information 

Presently, NYSE Arca requires that 

each ETP Holder 3 establish, maintain 

and enforce written policies and 

procedures reasonably designed to 

prevent the misuse of material, nonpublic information by the ETP Holder or 

persons associated with the ETP 

Holder.4 For purposes of this 

requirement, conduct constituting the 

misuse of material, non-public 

information includes, but is not limited 

to, the following: 

(a) trading in any securities issued by 

a corporation, or in any related 

securities or related options or other 

derivative securities, while in 

possession of material, non-public 

information concerning that issuer; or 

(b) trading in a security or related 

options or other derivative securities, 

while in possession of material, nonpublic information concerning 

imminent transactions in the security or 

related securities; or 

(c) disclosing to another person or 

entity any material, non-public 

information involving a corporation 

whose shares are publicly traded or an 

imminent transaction in an underlying 

security or related securities for the 

purpose of facilitating the possible 

misuse of such material, non-public 

information. 

The Exchange also has several rules 

prohibiting ETP Holders from 

disadvantaging their customers or other 

market participants by improperly 

capitalizing on the ETP Holders’ access 

to or receipt of material, non-public 

information. For example, NYSE Arca 

Equities Rule 6.16 prohibits an ETP 

Holder from trading ahead of its 

customer’s limit orders.5 In addition, 

the Exchange prohibits the practice of 

‘‘front-running’’ block transactions.6

Members Retain Responsibility for 

Compliance 

In this context, by prohibiting the 

misuse of material, non-public 

information, the Exchange has 

appropriately defined the behavior that 

its participants must avoid. In the 

Exchange’s view, prescribing the form 

that these policies and procedures must 

take is unnecessarily burdensome. By 

defining certain prohibited behavior 

(e.g., Rules 6.3, 6.16, and 6.6) the 

Exchange has placed its participants on 

notice as to their specific compliance 


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Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Notices 46273 

7See Nasdaq Rules 2110–2, 2110–3, and 2110–4. 

8 In Regulatory Notice 07–59, FINRA recognized 

that policies and procedures may differ among 

entities depending on their business model (e.g., 

size, structure, customer base and product mix). In 

this context, it is important to note the need for 

flexibility and fluidity—should an entity’s business 

model change or expand, it may also be appropriate 

to revise its supervisory policies and procedures so 

as to better reflect its new business model. Further, 

although NASD Rule 3010 does not specifically 

require firms to establish specific information 

barriers, NTM 07–59 identifies information barrier 

procedures as a relevant process by which to 

manage conflicts of interest or to prevent 

communications of material non-public information 

between certain individuals or groups. 

9The Exchange understands that Nasdaq will 

similarly amend its rules regarding trading ahead of 

research reports to reflect this requirement. 

10NYSE Arca notes that its current examination 

procedure regarding its review for appropriate 

supervisory systems and procedures will remain in 

place. 

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

12 15 U.S.C. 78f(b)(5). 

burdens with respect to preventing the 

misuse of material, non-public 

information. Further, NYSE Arca 

Equities Rule 6.18 requires each ETP 

Holder to (i) establish and maintain a 

system to supervise the activities of its 

associated persons and (ii) establish, 

maintain, and enforce written 

procedures to supervise the business in 

which it engages and to supervise the 

activities of its associated persons that 

are reasonably designed to achieve 

compliance with applicable federal 

securities laws and regulations, and 

with the NYSE Arca Equities Rules. 

The Exchange, therefore, proposes to 

eliminate, in their entirety, the 

requirements set forth in NYSE Arca 

Equities Rule 7.26 that Market Makers 

on the Corporation maintain certain 

specifically prescribed information 

barrier procedures. This proposal is 

consistent with the approach currently 

employed by the Nasdaq Stock Market, 

L.L.C. (‘‘Nasdaq’’), which does not 

generally require its members to 

establish or maintain information 

barriers. 

Comparison to Nasdaq’s Framework 

By amending its rules in accordance 

with this proposal, the Exchange 

reinforces a regulatory structure that 

clearly identifies prohibited conduct 

(e.g., misuse of material, non-public 

information) without further requiring 

Market Makers to establish and 

maintain specific compliance 

mechanisms (e.g., information barriers). 

For example, Nasdaq prohibits the 

misuse of material, non-public 

information but does not generally 

require that its members establish and 

maintain information barriers.7 Similar 

to NYSE Arca Equities Rule 6.18, 

however, Nasdaq Rule 3010 requires its 

members to establish and maintain a 

system to supervise the activities of its 

associated persons that are reasonably 

designed to achieve compliance with 

applicable federal securities laws and 

regulations, and with applicable Nasdaq 

Rules. Nasdaq Rule 3010 further 

incorporates by reference NASD Rule 

3010, requiring compliance with that 

rule as if it were part of Nasdaq’s rules.8

The Exchange believes that the 

approach proposed herein is consistent 

with Nasdaq’s structure. First, NYSE 

Arca has similar requirements 

concerning the maintenance of a 

supervisory system and written 

supervisory procedures. The Exchange’s 

rules governing supervision are similar 

to Nasdaq’s rules (which in-turn 

incorporate compliance with NASD 

Rule 3010). The Exchange notes that 

FINRA and NYSE Arca have previously 

acknowledged, pursuant to the 

provisions of Rule 17d–2 under the 

Securities Exchange Act of 1934 (‘‘17d– 

2 Agreement’’), that, collectively, NYSE 

Arca Equities Rules 6.18, 9.1(c), 9.1(d), 

and 9.2(b) are substantially similar to 

NASD Rule 3010. In this context, the 

Exchange proposes to amend NYSE 

Arca Equities Rule 6.18 in order to 

clarify that the Exchange construes the 

Supervisory System and Written 

Procedures requirements of this rule in 

a manner consistent with the similar 

requirements of NASD Rule 3010. 

Accordingly, the Exchange proposes 

adding the following (in addition to 

certain definitional references) as 

Commentary .01: 

‘‘ETP Holders shall comply with NASD 

Rule 3010(a)(1), (b)(1), and (c)(1) as if such 

rule were part of NYSE Arca’s Rules.’’ 

The Exchange further proposes 

adding new NYSE Arca Equities Rule 

6.7, prohibiting ETP Holders from 

establishing, increasing, decreasing or 

liquidating an inventory position in a 

security or a derivative of such security 

based on non-public advance 

knowledge of the content or timing of a 

research report in that security. Similar 

to FINRA Rule 5280, NYSE Arca hereby 

proposes to require that ETP Holders 

must establish, maintain and enforce 

procedures reasonably designed to 

restrict or limit the information flow 

between research department personnel 

and trading department personnel, so as 

to prevent trading department personnel 

from utilizing non-public advance 

knowledge of the issuance or content of 

a research report.9

Second, like Nasdaq, market makers 

and Lead Market Makers on NYSE Arca 

do not have any advantages regarding 

relevant trading information provided 

by the Exchange, either at, or prior to, 

the point of execution vis-a`-vis other 

market participants. The Exchange notes 

that NYSE Arca ETP Holders, Market 

Makers, and Lead Market Makers have 

equal access to the relevant trading 

information coming from or provided by 

the Exchange. Accordingly, it is 

appropriate for the Exchange to 

establish the same approach with 

respect to information barriers as 

employed by Nasdaq.10

Conclusion: Flexibility and 

Accountability 

Eliminating NYSE Arca Equities Rule 

7.26, adding NYSE Arca Equities Rule 

6.7 and clarifying NYSE Arca Equities 

Rule 6.18, as proposed herein, offers 

Exchange participants both certainty 

and flexibility. NYSE Arca participants 

are on notice as to their obligations to 

maintain and enforce written policies 

and procedures reasonably designed to 

prevent the misuse of material, nonpublic information. Like Nasdaq, NYSE 

Arca participants will now be afforded 

the same flexibility to maintain 

compliance mechanisms of their own 

design. The Exchange believes that this 

approach fosters a fair and orderly 

marketplace without being overly 

burdensome upon its members. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) 11 of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’), in general, and furthers the 

objectives of Section 6(b)(5),12 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 

mechanisms of a free and open market 

and a national market system. 

Eliminating NYSE Arca Equities Rule 

7.26, while establishing new NYSE Arca 

Equities Rule 6.7 and revising NYSE 

Arca Equities Rule 6.18, should 

eliminate unnecessary regulatory 

burdens while at the same time 

retaining an appropriate mechanism 

designed to ensure that material, nonpublic information continues to be 

protected. 

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. 


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46274 Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Notices 

13 In approving this rule change, the Commission 

notes that it has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

14 15 U.S.C. 78f(b)(5). 

15Other Business Activities include conducting 

an investment banking or public securities 

business, making markets in the options overlying 

the security in which the Market Maker makes 

markets, and, subject to certain specified 

exceptions, functioning as a General Authorized 

Trader. See NYSE Arca Equities Rule 7.26. 

16See Securities Exchange Act Release No. 58328 

(August 7, 2008), 73 FR 48260 (August 18, 2008) 

(SR–NYSE–2008–45) (articulating concerns in the 

context of approving changes to NYSE Rule 98). 17Market Makers are a type of ETP Holder. See 

NYSE Arca Equities Rule 7.20. The Commission 

believes that the information-sharing concerns 

regarding Market Makers applies equally to ETP 

Holders. 18See NYSE Arca Equities Rule 6.3, Commentary 

.01. 

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. 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–2009–78 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2009–78. 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 inspection and copying 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 NYSE Arca. 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–NYSEArca–2009–78 and 

should be submitted on or before 

September 29, 2009. 

IV. Commission’s Findings and Order 

Granting Accelerated Approval of the 

Proposed Rule Change 

After careful consideration, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

a national securities exchange.13 The 

Commission believes that the proposal 

is consistent with Section 6(b)(5) 14 in 

particular, in that it is designed to 

prevent fraudulent and manipulative 

acts and practices, promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, 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 is proposing to 

eliminate NYSE Arca Equities Rule 7.26 

and the specifically prescribed 

information barriers described therein, 

and to adopt a more principles-based 

approach that would permit a Market 

Maker to develop and apply its own 

policies and procedures to, among other 

things, prohibit the misuse of material 

nonpublic information. NYSE Arca 

Equities Rule 7.26 addresses concerns 

arising from the potential for the sharing 

of material non-public information 

between a Market Maker’s market 

making activities and Other Business 

Activities of the Market Maker or its 

affiliates.15 For instance, one such 

concern is that the Market Maker or 

affiliate engaging in Other Business 

Activities might use non-public 

information that was acquired by the 

Market Maker through its role as a 

market maker, such as trading based on 

information on the Market Maker’s 

book. Another concern is that the 

Market Maker might use material nonpublic information received from the 

entity engaging in Other Business 

Activities, such as trading based on a 

change in the firm’s buy or sell 

recommendation.16

While the proposed rules will no 

longer specify policies and procedures a 

Market Maker must establish, the 

proposal will require that the policies 

and procedures be reasonably designed 

to ensure compliance with applicable 

federal securities law and regulations, 

and with Exchange rules. The 

Commission believes that, with 

adequate oversight by the Exchange of 

its members, elimination of prescriptive 

information barrier requirements should 

not reduce the effectiveness of NYSE 

Arca rules requiring ETP Holders to 

establish and maintain systems to 

supervise the activities of ETP Holders, 

and written procedures that are 

reasonably designed to comply with 

applicable securities laws and Exchange 

rules, including the prohibition on 

misuse of material nonpublic 

information. 

Specifically, NYSE Arca Equities Rule 

6.3, which requires ETP Holders 17 to 

establish, maintain and enforce written 

policies and procedures reasonably 

designed to prevent the misuse of 

material non-public information by the 

ETP Holder or persons associated with 

the ETP Holder, will continue to apply. 

The misuse of material non-public 

information includes trading in a 

security or related options or other 

derivative securities, while in 

possession of material non-public 

information concerning imminent 

transactions in the security or related 

securities.18 The Exchange also 

proposes to add NYSE Arca Equities 

Rule 6.7, which will prohibit an ETP 

Holder from establishing, increasing, 

decreasing or liquidating an inventory 

position in a security or derivative of 

that security based on advance nonpublic knowledge of the content or 

timing of a research report concerning 

that security. Further, NYSE Arca 

Equities Rule 6.18, which sets forth an 

ETP Holder’s responsibilities or 

obligations related to conduct or 

supervision, will continue to apply and 

will be strengthened and clarified by 

explicitly requiring ETP Holders to 

comply with NASD Rule 3010(a)(1), 

(b)(1), and (c)(1) as if such rules were 

part of NYSE Arca’s Rules. As 

incorporated by the Exchange, NASD 


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Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Notices 46275 

19 15 U.S.C. 78s(b)(2). 

20See Securities Exchange Act Release No. 53128 

(Jan. 13, 2006), 71 FR 3550 (January 23, 2006) 

(adopting Nasdaq IM–2110–2; IM–2110–3; IM– 

2110–4, and Rule 3010). 

21 15 U.S.C. 78s(b)(2). 

22 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The term ‘‘facility’’ as defined in Section 3(a)(2) 

of the Act, as amended, provides, when used with 

respect to an exchange includes its premises, 

tangible or intangible property whether on the 

premises or not, any rights to the use of such 

premises or property or any service thereof for the 

purpose of effecting or reporting a transaction on an 

exchange (including, among other things, any 

system of communication to or from the exchange, 

by ticker or otherwise, maintained by or with the 

consent of the exchange), and any right of the 

exchange to the use of any property or service. See 

15 U.S.C. 78c(a)(2). 

4See NYSE Arca Equities Rule 1.1(yy). 

5See NYSE Arca Equities Rule 7.29(b). 

Rule 3010(a)(1), (b)(1), and (c)(1) 

provide additional clarification that the 

supervisory systems and internal 

inspections of ETP Holders must be 

reasonably designed to achieve 

compliance with applicable securities 

laws and regulations and with 

applicable NYSE Arca rules, including 

those relating to the misuse of material 

non-public information. 

Pursuant to this proposal rule change, 

ETP Holders may utilize the flexible, 

principles-based approach to modify 

their policies and procedures as 

appropriate to reflect changes to their 

business model, business activities, or 

to the securities market itself. An ETP 

Holder should be proactive in assuring 

that its policies and procedures reflect 

the current state of its business and 

continue to be reasonably designed to 

achieve compliance with applicable 

federal securities law and regulations, 

and with applicable Exchange rules. In 

addition, the Commission notes that, 

while information barriers are not 

specifically required under the 

proposal, an ETP Holder’s business 

model or business activities may dictate 

that an information barrier or a 

functional separation be part of the 

appropriate set of policies and 

procedures that would be reasonably 

designed to achieve compliance with 

applicable securities law and 

regulations, and with applicable 

Exchange rules. 

The Commission believes that the 

regulatory approach in this proposed 

rule change is substantially similar to 

the regulatory approach of Nasdaq. In 

particular, the NYSE Arca approach, 

like the Nasdaq approach, (i) 

enumerates the conduct that is 

prohibited by its members, including 

the potential misuse of material nonpublic information and (ii) provides for 

the policies and procedures that must be 

reasonably designed to ensure 

compliance with the same. In addition, 

the Commission notes that the Exchange 

has represented that its current 

examination procedure for the review of 

appropriate supervisory systems and 

procedures will remain in place. 

The Commission also finds good 

cause, pursuant to Section 19(b)(2) of 

the Act,19 for approving the proposed 

rule change prior to the 30th day after 

the date of publication of notice in the 

Federal Register. Although this 

proposed rule change does not require 

that members maintain specificallyprescribed information barriers, it will 

continue to mandate that members 

establish and maintain a set of policies 

and procedures reasonably designed to 

achieve compliance with applicable 

securities law and regulations, and with 

applicable Exchange rules. As such, the 

Exchange is adopting an approach that 

is substantially similar to the approach 

currently employed by Nasdaq.20

V. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,21 that the 

proposed rule change (SR–NYSEArca– 

2009–78) be, and it hereby is, approved 

on an accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–21641 Filed 9–4–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60607; File No. SR– 

NYSEArca–2009–80] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Establish the Risk 

Management Gateway (‘‘RMG’’) 

Service 

September 1, 2009. 

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 August 

28, 2009, NYSE Arca, Inc. (‘‘NYSE 

Arca’’ or the ‘‘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 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 Exchange proposes to establish 

its Risk Management Gateway (‘‘RMG’’) 

service. A copy of this filing is available 

on the Exchange’s Web site at http:// 

www.nyse.com, at the Exchange’s 

principal office and at the Commission’s 

Public Reference Room. 

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 offer, 

through its wholly-owned subsidiary 

NYSE Euronext Advanced Trading 

Solutions, Inc., the Risk Management 

Gateway (‘‘RMG’’) service as a facility 3

of the Exchange, to NYSE Arca Users.4

NYSE Transact Tools, Inc, a division of 

the NYSE Euronext Advanced Trading 

Solutions Group (‘‘NYXATS’’), owns 

RMG. 

Traditionally, the customers of an 

ETP Holder gave orders to the ETP 

Holder who then submitted those orders 

to the Exchange on behalf of the 

customer. By means of sponsored 

access, an ETP Holder may allow its 

customers to enter orders directly into 

the trading systems of the Exchange as 

Sponsored Participants, without the 

Sponsoring ETP Holder acting as an 

intermediary.5

To facilitate the ability of Sponsoring 

ETP Holders to monitor and oversee the 

sponsored access activity of their 

Sponsored Participants, NYXATS will 

offer an order-verification service to 

Sponsoring ETP Holders. This service 

will act as a risk filter by causing the 

orders of Sponsored Participants to pass 

through RMG prior to entering the 

Exchange’s trading systems for 

execution. When a Sponsored 

Participant’s order passes through RMG, 


jlentini on DSKJ8SOYB1PROD with NOTICES