48324 Federal Register / Vol. 74, No. 182 / Tuesday, September 22, 2009 / Notices 

except as to price adjustments. See id. 

The Postal Service represents that the 

new contract is consistent with 39 

U.S.C. 3633(a). See id., Attachment E. 

The existing contract’s terms and 

conditions for Express Mail remain in 

effect. 

The Postal Service filed much of the 

supporting materials, including the 

specific Priority Mail Contract 18, under 

seal. In its Request, the Postal Service 

maintains that the contract and related 

financial information, including the 

customer’s name and the accompanying 

analyses that provide prices, terms, 

conditions, cost data, and financial 

projections should remain under seal. 

Id. at 2. It also requests that the 

Commission order that the duration of 

such treatment of all customer 

identifying information be extended 

indefinitely, instead of ending after ten 

years. Id., Attachment F, at 1 and 7. 

II. Notice of Filing 

The Commission establishes Docket 

Nos. MC2009–42 and CP2009–63 for 

consideration of the Request pertaining 

to the proposed Priority Mail Contract 

18 product and the related contract, 

respectively. In keeping with practice, 

these dockets are addressed on a 

consolidated basis for purposes of this 

Order; however, future filings should be 

made in the specific docket in which 

issues being addressed pertain. 

Interested persons may submit 

comments on whether the Postal 

Service’s filings in the captioned 

dockets are consistent with the policies 

of 39 U.S.C. 3632, 3633, or 3642 and 39 

CFR part 3015 and 39 CFR 3020 subpart 

B. Comments are due no later than 

September 23, 2009. The public 

portions of these filings can be accessed 

via the Commission’s Web site (http:// 

www.prc.gov). 

The Commission appoints Paul L. 

Harrington to serve as Public 

Representative in these dockets. 

III. Supplemental Information 

The Commission requests the Postal 

Service to provide the following 

supplemental information regarding the 

new agreement by September 21, 2009: 

1. Please explain if the spreadsheets 

filed on February 20, 2009 need to be 

revised to reflect the modifications in 

the current spreadsheets, and clarify 

whether all volumes, weight, and cubic 

feet figures are actual shipper’s data. 

2. Please verify that the existing 

contract, as revised, still complies with 

39 U.S.C. 3633(a). 

IV. Ordering Paragraphs 

It is ordered: 

1. The Commission establishes Docket 

Nos. MC2009–42 and CP2009–63 for 

consideration of the matter raised in 

each docket. 

2. Pursuant to 39 U.S.C. 505, Paul L. 

Harrington is appointed to serve as 

officer of the Commission (Public 

Representative) to represent the 

interests of the general public in these 

proceedings. 

3. Comments by interested persons in 

these proceedings are due no later than 

September 23, 2009. 

4. Responses to the supplemental 

information request are due by 

September 21, 2009. 

5. The Secretary shall arrange for 

publication of this order in the Federal 

Register. 

Issued September 15, 2009. 

By the Commission. 

Shoshana M. Grove, 

Secretary. 

[FR Doc. E9–22692 Filed 9–21–09; 8:45 am] 

BILLING CODE 7710–FW–P 

SMALL BUSINESS ADMINISTRATION 

[Disaster Declaration #11880 and #11881] 

California Disaster #CA–00142 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Notice. 

SUMMARY: This is a notice of an 

Administrative declaration of a disaster 

for the State of California dated 09/14/ 

2009. 

Incident: Station Fire. 

Incident Period: 08/26/2009 and 

continuing. 

DATES: Effective Date: 09/14/2009. 

Physical Loan Application Deadline 

Date: 11/13/2009. 

Economic Injury (EIDL) Loan 

Application Deadline Date: 06/14/2010. 

ADDRESSES: Submit completed loan 

applications to: U.S. Small Business 

Administration, Processing and 

Disbursement Center, 14925 Kingsport 

Road, Fort Worth, TX 76155. 

FOR FURTHER INFORMATION CONTACT: A. 

Escobar, Office of Disaster Assistance, 

U.S. Small Business Administration, 

409 3rd Street, SW., Suite 6050, 

Washington, DC 20416. 

SUPPLEMENTARY INFORMATION: Notice is 

hereby given that as a result of the 

Administrator’s disaster declaration, 

applications for disaster loans may be 

filed at the address listed above or other 

locally announced locations. 

The following areas have been 

determined to be adversely affected by 

the disaster: 

Primary Counties: Los Angeles. 

Contiguous Counties: 

California: Kern, Orange, San 

Bernardino, Ventura. 

The Interest Rates are: 

Percent 

Homeowners With Credit Available Elsewhere ......................... 5.500 

Homeowners Without Credit 

Available Elsewhere .................. 2.750 

Businesses With Credit Available 

Elsewhere ................................. 6.000 

Businesses & Small Agricultural 

Cooperatives Without Credit 

Available Elsewhere .................. 4.000 

Other (Including Non-Profit Organizations) With Credit Available 

Elsewhere ................................. 4.500 

Businesses and Non-Profit Organizations Without Credit Available Elsewhere ......................... 4.000 

The number assigned to this disaster 

for physical damage is 11880 5 and for 

economic injury is 11881 0. 

The State which received an EIDL 

Declaration # is California. 

(Catalog of Federal Domestic Assistance 

Numbers 59002 and 59008) 

Dated: September 14, 2009. 

Karen G. Mills, 

Administrator. 

[FR Doc. E9–22691 Filed 9–21–09; 8:45 am] 

BILLING CODE 8025–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

28900; File No. 812–13516–01] 

Grail Advisors LLC and Grail Advisors 

ETF Trust; Notice of Application 

September 14, 2009. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application under 

section 6(c) of the Investment Company 

Act of 1940 (‘‘Act’’) for an exemption 

from section 15(a) of the Act and rule 

18f–2 under the Act, as well as from 

certain disclosure requirements. 

SUMMARY OF THE APPLICATION: 

Applicants, including an activelymanaged open-end exchange traded 

fund, request an order that would 

permit them to enter into and materially 

amend subadvisory agreements without 

shareholder approval and would grant 

relief from certain disclosure 

requirements. 

Applicants: Grail Advisors LLC 

(‘‘Manager’’) and Grail Advisors ETF 

Trust (‘‘Trust’’). 


sroberts on DSKD5P82C1PROD with NOTICES
Federal Register / Vol. 74, No. 182 / Tuesday, September 22, 2009 / Notices 48325 

1 Grail Advisors, LLC and Grail Advisors’ Alpha 

ETF Trust, Investment Company Act Rel. Nos. 

28571 (Dec. 23, 2008) (notice) and 28604 (Jan. 16, 

2009) (order). 

2Applicants also request relief with respect to 

future Funds and any other existing or future 

registered open-end management investment 

company or series thereof that: (a) Is advised by the 

Manager or any person controlling, controlled by, 

or under common control with the Manager 

(included in the term ‘‘Manager’’); (b) uses the 

management structure described in the application; 

and (c) complies with the terms and conditions 

contained in the application (included in the term 

‘‘Funds’’). The Trust is the only existing investment 

company that currently intends to rely on the 

requested order. If the name of any Fund contains 

the name of a Sub-Adviser (as defined below), the 

name of the Manager, including the legal name of 

the Manager and/or any ‘‘doing business as’’ or 

business unit names used by the Manager, will 

precede the name of the Sub-Adviser. 

Filing Dates: The application was 

filed on April 10, 2008, and amended on 

May 15, 2009, and September 14, 2009. 

Hearing or Notification of Hearing: An 

order granting the application will be 

issued unless the Commission orders a 

hearing. Interested persons may request 

a hearing by writing to the 

Commission’s Secretary and serving 

applicants with a copy of the request, 

personally or by mail. Hearing requests 

should be received by the Commission 

by 5:30 p.m. on October 7, 2009 and 

should be accompanied by proof of 

service on applicants, in the form of an 

affidavit or, for lawyers, a certificate of 

service. Hearing requests should state 

the nature of the writer’s interest, the 

reason for the request, and the issues 

contested. Persons who wish to be 

notified of a hearing may request 

notification by writing to the 

Commission’s Secretary. 

ADDRESSES: Secretary, U.S. Securities 

and Exchange Commission, 100 F 

Street, NE., Washington, DC 20549– 

1090. Applicants, c/o Mr. William M. 

Thomas, Grail Advisors, LLC, One Ferry 

Building, Suite 255, San Francisco, CA 

94111. 

FOR FURTHER INFORMATION CONTACT: Jean 

E. Minarick, Senior Counsel, at (202) 

551–6811, or Michael W. Mundt, 

Assistant Director, at (202) 551–6821 

(Division of Investment Management, 

Office of Investment Company 

Regulation). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

Web site by searching for the file 

number, or an applicant using the 

Company name box, at http:// 

www.sec.gov/search/search.htm or by 

calling (202) 551–8090. 

Applicants’ Representations 

1. The Trust is organized as a 

Delaware statutory trust and is 

registered under the Act as an open-end 

management investment company. The 

Trust operates as an actively-managed 

exchange traded open-end fund (‘‘ETF’’) 

in reliance on an exemptive order.1 The 

Trust currently has two initial funds 

(‘‘Initial Funds’’); additional funds 

(together with the Initial Funds, the 

‘‘Funds’’) may be added in the future. 

Each Fund has its own investment 

objective(s), policies and restrictions. 

2. The Manager, a Delaware limited 

liability company, is registered as an 

investment adviser under the 

Investment Advisers Act of 1940 

(‘‘Advisers Act’’). The Manager is a 

majority-owned subsidiary of Grail 

Partners LLC. The Manager serves as the 

investment adviser to the Initial Funds 

and will serve as investment adviser to 

any other Fund. The Manager has an 

investment advisory agreement with the 

Trust for the Initial Funds (an 

‘‘Investment Advisory Agreement’’) 

approved by the board of trustees of the 

Trust (the ‘‘Board’’), including a 

majority of the trustees who are not 

‘‘interested persons,’’ as defined in 

section 2(a)(19) of the Act (the 

‘‘Independent Board Members’’), and 

the shareholders of each Fund.2

3. Under the Investment Advisory 

Agreement, the Manager is responsible 

for providing a program of continuous 

investment management to each Fund 

in accordance with the investment 

objective, policies and limitations of the 

Fund. The Investment Advisory 

Agreement permits the Manager to enter 

into separate advisory agreements 

(‘‘Sub-Advisory Agreements’’) with subadvisers (‘‘Sub-Advisers’’). Each SubAdviser is, and any future Sub-Adviser 

will be, registered as an investment 

adviser under the Advisers Act. The 

specific investment decisions for each 

Fund are made by the Manager based on 

purchase and sale recommendations 

from one or more Sub-Advisers selected 

by the Manager to focus on all or a 

portion of the assets of the Fund or, at 

the discretion of the Manager, by the 

Sub-Advisers themselves with respect to 

the portion of any Fund portfolio 

allocated to them, subject to the general 

supervision by the Manager and the 

Board. The Manager will select SubAdvisers based on an evaluation of the 

Sub-Adviser’s performance, the SubAdviser’s fees and services in relation to 

other investment advisers performing 

similar services, the nature of the advice 

provided by the Sub-Adviser and the 

Sub-Adviser’s reputation in the 

investment community. Sub-Advisers 

must be approved by the Board, 

including a majority of the Independent 

Board Members. The Manager will 

monitor and evaluate the performance 

of Sub-Advisers and recommend to the 

Board their hiring, termination and 

replacement. The Manager will 

compensate each Sub-Adviser out of the 

advisory fees paid to the Manager by the 

Fund. 

4. Applicants request an order to 

permit the Manager, subject to Board 

approval, to enter into and materially 

amend Subadvisory Agreements 

without obtaining shareholder approval. 

The requested relief will not extend to 

any Sub-Adviser who is an affiliated 

person, as defined in section 2(a)(3) of 

the Act, of a Fund, the Trust or the 

Manager, other than by reason of serving 

as a Sub-Adviser to one or more of the 

Funds (‘‘Affiliated Sub-Adviser’’). 

5. Applicants also request an 

exemption from the various disclosure 

provisions described below that may 

require the Funds to disclose fees paid 

by the Manager to the Sub-Advisers. An 

exemption is requested to permit a Fund 

to disclose (both as a dollar amount and 

as a percentage of the Fund’s net assets): 

(a) The aggregate fees paid to the 

Manager and any Affiliated SubAdvisers; and (b) the aggregate fees paid 

to Sub-Advisers other than Affiliated 

Sub-Advisers (collectively, ‘‘Aggregate 

Fee Disclosure’’). Any Fund that 

employs an Affiliated Sub-Adviser will 

provide separate disclosure of any fees 

paid to the Affiliated Sub-Adviser. 

6. Applicants state that the requested 

relief is unusual insofar as the requested 

order seeks relief for an ETF. However, 

applicants believe that operations of the 

Funds under the requested order 

address the concerns historically 

considered by the Commission when 

granting identical relief to mutual funds. 

Applicants believe that similar to 

shareholders of a mutual fund who may 

‘‘vote with their feet’’ by redeeming 

their individual shares at net asset value 

(‘‘NAV’’) if they do not approve of a 

change in sub-adviser or sub-advisory 

agreement, Fund shareholders will be 

able to sell shares in the secondary 

market at negotiated prices that closely 

track the relevant Fund’s NAV if they do 

not approve of a change. Applicants 

state that the Funds will rely on the 

same delivery mechanisms currently 

used by certain mutual funds to ensure 

that shareholders who purchase shares 

in the secondary market receive a 

prospectus and all of the information 

that would have been provided in a 

proxy statement, except for the 

modifications discussed below, in an 

information statement. Applicants note 

that the requested relief is not broader 

in scope than the relief previously 

granted to mutual funds. 


sroberts on DSKD5P82C1PROD with NOTICES
48326 Federal Register / Vol. 74, No. 182 / Tuesday, September 22, 2009 / Notices 

3Form N–1A was recently amended by the 

Commission, effective March 31, 2009, and Item 

14(a)(3) should be read to refer to Item 19(a)(3) for 

each Fund when that Fund begins using the revised 

form. 

Applicants’ Legal Analysis 

1. Section 15(a) of the Act provides, 

in relevant part, that it is unlawful for 

any person to act as an investment 

adviser to a registered investment 

company except pursuant to a written 

contract that has been approved by a 

vote of a majority of the company’s 

outstanding voting securities. Rule 18f– 

2 under the Act provides that each 

series or class of stock in a series 

investment company affected by a 

matter must approve the matter if the 

Act requires shareholder approval. 

2. Form N–1A is the registration 

statement used by open-end investment 

companies. Item 14(a)(3) of Form N–1A 

requires disclosure of the method and 

amount of the investment adviser’s 

compensation.3

3. Rule 20a–1 under the Act requires 

proxies solicited with respect to an 

investment company to comply with 

Schedule 14A under the Securities 

Exchange Act of 1934 (‘‘Exchange Act’’). 

Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) 

and 22(c)(9) of Schedule 14A, taken 

together, require a proxy statement for a 

shareholder meeting at which the 

advisory contract will be voted upon to 

include the ‘‘rate of compensation of the 

investment adviser,’’ the ‘‘aggregate 

amount of the investment adviser’s 

fees,’’ a description of the ‘‘terms of the 

contract to be acted upon,’’ and, if a 

change in the advisory fee is proposed, 

the existing and proposed fees and the 

difference between the two fees. 

4. Form N–SAR is the semi-annual 

report filed with the Commission by 

registered investment companies. Item 

48 of Form N–SAR requires investment 

companies to disclose the rate schedule 

for fees paid to their investment 

advisers, including the Sub-Advisers. 

5. Regulation S–X sets forth the 

requirements for financial statements 

required to be included as part of 

investment company registration 

statements and shareholder reports filed 

with the Commission. Sections 6– 

07(2)(a), (b) and (c) of Regulation S–X 

require that investment companies 

include in their financial statements 

information about investment advisory 

fees. 

6. Section 6(c) of the Act provides that 

the Commission may exempt any 

person, security, or transaction or any 

class or classes of persons, securities, or 

transactions from any provisions of the 

Act, or from any rule thereunder, if such 

exemption is necessary or appropriate 

in the public interest and consistent 

with the protection of investors and the 

purposes fairly intended by the policy 

and provisions of the Act. Applicants 

seek the same relief previously granted 

to mutual funds, and believe that the 

requested relief is equally appropriate 

for ETFs. Applicants state that the 

requested relief meets the necessary 

standards for the reasons discussed 

below. 

7. Applicants assert that the 

shareholders rely on the Manager to 

select and monitor the Sub-Advisers 

best suited to achieve a Fund’s 

investment objectives. Applicants 

contend that, from the perspective of the 

investor, the role of the Sub-Advisers is 

comparable to that of individual 

portfolio managers employed by 

traditional investment advisory firms. 

Applicants state that requiring 

shareholder approval of each SubAdvisory Agreement would impose 

costs and unnecessary delays on the 

Funds, and may preclude the Manager 

from acting promptly in a manner 

considered advisable by the Board. 

Applicants note that the Investment 

Advisory Agreements and any SubAdvisory Agreement with an Affiliated 

Sub-Adviser will remain subject to 

section 15(a) of the Act and rule 18f–2 

under the Act. 

8. Applicants assert that many SubAdvisers use a ‘‘posted’’ rate schedule to 

set their fees. Applicants state that, 

while Sub-Advisers are willing to 

negotiate fees lower than those posted 

in the schedule, they are reluctant to do 

so when the fees are disclosed to other 

prospective and existing customers. 

Applicants submit that the requested 

relief will encourage potential SubAdvisers to negotiate lower subadvisory 

fees with the Manager. 

Applicants’ Conditions 

Applicants agree that any order 

granting the requested relief will be 

subject to the following conditions: 

1. Before a Fund may rely on the 

requested order, the operation of the 

Fund in the manner described in the 

application will be approved by a 

majority of the Fund’s outstanding 

voting securities, as defined in the Act, 

or, in the case of a Fund whose public 

shareholders purchase shares on the 

basis of a prospectus containing the 

disclosure contemplated by condition 2 

below, by the sole initial shareholder 

before offering the Fund’s shares to the 

public. 

2. Each Fund will disclose in its 

prospectus the existence, substance and 

effect of the order granted pursuant to 

the application. In addition, each Fund 

will hold itself out to the public as 

employing the management structure 

described in the application. The 

prospectus will prominently disclose 

that the Manager has ultimate 

responsibility, subject to oversight by 

the Board, to oversee the Sub-Advisers 

and recommend their hiring, 

termination, and replacement. 

3. Within 90 days of the hiring of any 

new Sub-Adviser, the Manager will 

furnish shareholders all information 

about the new Sub-Adviser that would 

be included in a proxy statement, except 

as modified to permit the Aggregate Fee 

Disclosure. This information will 

include Aggregate Fee Disclosure and 

any change in such disclosure caused by 

the addition of a new Sub-Adviser. To 

meet this obligation, the Fund will 

provide shareholders of the applicable 

Fund within 90 days of the hiring of a 

new Sub-Adviser with an information 

statement meeting the requirements of 

Regulation 14C, Schedule 14C and Item 

22 of Schedule 14A under the Exchange 

Act, except as modified by the order to 

permit Aggregate Fee Disclosure. 

4. The Manager will not enter into a 

Sub-Advisory Agreement with any 

Affiliated Sub-Adviser without that 

agreement, including the compensation 

to be paid thereunder, being approved 

by the shareholders of the applicable 

Fund. 

5. At all times, at least a majority of 

the Board will be Independent Board 

Members and the nomination of new or 

additional Independent Board Members 

will be at the discretion of the thenexisting Independent Board Members. 

6. When a change of Sub-Adviser is 

proposed for a Fund with an Affiliated 

Sub-Adviser, the Board, including a 

majority of the Independent Board 

Members, will make a separate finding, 

reflected in the applicable Board 

minutes, that such change is in the best 

interests of the Fund and its 

shareholders and does not involve a 

conflict of interest from which the 

Manager or an Affiliated Sub-Adviser 

derives an inappropriate advantage. 

7. The Manager will provide general 

management services to each Fund, 

including overall supervisory 

responsibility for the general 

management and investment of the 

Fund’s assets and, subject to review and 

approval of the Board, will, for each 

Fund: (a) Set the Fund’s overall 

investment strategies; (b) evaluate, 

select and recommend Sub-Advisers to 

provide purchase and sale 

recommendations to the Manager or 

investment advice to all or a part of the 

Fund’s assets; (c) when appropriate, 

allocate and reallocate the Fund’s assets 

among multiple Sub-Advisers; (d) 

monitor and evaluate the Sub-Advisers’ 


sroberts on DSKD5P82C1PROD with NOTICES
Federal Register / Vol. 74, No. 182 / Tuesday, September 22, 2009 / Notices 48327 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 60429 

(August 4, 2009), 74 FR 40259 (‘‘Notice’’). 

4The provisions of NYSE Rule 1000 relating to 

CCS are in effect pursuant to a pilot that 

commenced in October 2008 and that is currently 

scheduled to end on October 1, 2009. The 

Commission understands that NYSE plans to 

request an extension of the pilot before it expires. 

5The Display Book® system is an order 

management and execution facility. The Display 

Book system receives and displays orders to the 

DMMs, contains the order information, and 

provides a mechanism to execute and report 

transactions and publish the results to the 

Consolidated Tape. The Display Book system 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. 6See NYSE Rule 62, Supplementary Material .10. 

performance; and (e) implement 

procedures reasonably designed to 

ensure compliance by the Sub-Advisers 

with the Fund’s investment objective, 

policies and restrictions. 

8. No director, trustee or officer of the 

Trust or a Fund, or director or officer of 

the Manager, will own directly or 

indirectly (other than through a pooled 

investment vehicle over which such 

person does not have control), any 

interest in a Sub-Adviser except for: (a) 

Ownership of interests in the Manager 

or any entity that controls, is controlled 

by, or is under common control with the 

Manager; or (b) ownership of less than 

1% of the outstanding securities of any 

class of equity or debt of any publicly 

traded company that is either a SubAdviser or an entity that controls, is 

controlled by, or is under common 

control with a Sub-Adviser. 

9. Each Fund will disclose in its 

registration statement the Aggregate Fee 

Disclosure. 

10. Independent legal counsel, as 

defined in rule 0–1(a)(6) under the Act, 

has been and will continue to be 

engaged to represent the Independent 

Board Members. The selection of such 

counsel will be within the discretion of 

the then-existing Independent Board 

Members. 

11. In the event the Commission 

adopts a rule under the Act providing 

substantially similar relief to that in the 

order requested in the application, the 

requested order will expire on the 

effective date of that rule. 

12. The Manager will provide the 

Board, no less frequently than quarterly, 

with information about the Manager’s 

profitability on a per Fund basis. This 

information will reflect the impact on 

profitability of the hiring or termination 

of any Sub-Adviser during the 

applicable quarter. 

13. Whenever a Sub-Adviser is hired 

or terminated, the Manager will provide 

the Board with information showing the 

expected impact on the profitability of 

the Manager. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–22686 Filed 9–21–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60671; File No. SR–NYSE– 

2009–71] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Order 

Approving a Proposed Rule Change 

Amending NYSE Rule 1000 to Allow 

Exchange Systems to Access CCS 

Interest To Partially Fill an Incoming 

Limit Order 

September 15, 2009. 

I. Introduction 

On July 20, 2009, New York Stock 

Exchange LLC (‘‘NYSE’’ or the 

‘‘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 NYSE Rule 1000 to allow 

Exchange systems to access CCS interest 

to partially fill an incoming limit order. 

The proposed rule change was 

published for comment in the Federal 

Register on August 11, 2009.3 The 

Commission did not receive any 

comment letters on the proposed rule 

change. This order approves the 

proposed rule change. 

II. Description 

Background 

The NYSE offers Designated Market 

Makers (‘‘DMMs’’) the ability to create a 

schedule of additional non-displayed 

liquidity at various price points where 

the DMM is willing to interact with, and 

provide price improvement to, incoming 

orders in the Exchange’s system. This 

schedule is known as the DMM Capital 

Commitment Schedule (‘‘CCS’’).4 CCS 

provides the Display Book® 5 with the 

amount of shares that the DMM is 

willing to trade at price points outside, 

at, and inside the Exchange BBO. CCS 

interest is separate and distinct from 

other DMM interest and serves as the 

interest of last resort. 

When an order is entered for an 

amount of shares that exceeds the 

liquidity available at the Exchange BBO, 

Exchange systems review all the 

liquidity available on the Display Book, 

including CCS interest, to determine the 

final price point at which the order can 

be fully executed (the ‘‘completion 

price’’). Exchange systems determine 

the completion price by calculating the 

unfilled volume of the incoming order 

(i.e., the volume of the incoming order 

that exceeds the volume available to 

execute against it that is then present in 

the Exchange bid or offer) and reviewing 

the additional displayed and nondisplayed interest available in the 

Display Book, which may be at more 

than one price point, including the CCS 

interest submitted by the DMM unit that 

is available at the completion price. 

Exchange systems also take into account 

protected bids or offers on markets other 

than the Exchange (‘‘away interest’’) 

when determining the completion price. 

Exchange systems then review the 

CCS to determine if the number of 

shares provided via the DMM’s CCS at 

the completion price is less than the 

number of CCS shares provided at the 

next different price that has interest that 

is one minimum price variation 

(‘‘MPV’’) (as that term is defined in 

Exchange Rule 62 6) or more higher (in 

the case of an order to sell) or at the next 

different price that has interest that is 

one MPV or more lower (in the case of 

an order to buy) (hereinafter collectively 

referred to as ‘‘better price’’). If the 

volume of CCS interest that would be 

accessed is greater at the completion 

price, or is the same at the completion 

price and the better price, Exchange 

systems access CCS interest at the 

completion price with CCS interest 

yielding to any other interest in 

Exchange systems at the completion 

price. If the number of shares that 

would be allocated to the CCS interest 

at the better price is greater than the 

number of shares that would be 

allocated to the DMM’s CCS interest at 

the completion price, then Exchange 

systems will access the CCS liquidity 

available at the better price with CCS 

interest yielding to any other interest in 

Exchange systems (both displayed and 

undisplayed reserve interest) at the 

better price. Any remaining balance of 

the incoming order is executed at the 

completion price against displayable 

and non-displayable interest pursuant to 


sroberts on DSKD5P82C1PROD with NOTICES