Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Notices 46281 

8 17 CFR 240.17d–1. 

9 17 CFR 240.17d–2. 

10Common rules are ISE rules that are 

substantially similar to the rules of the nonaffiliated SRO. 

11See Notice, 74 FR at 38069. 

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

13This oversight will be accomplished through a 

17d–2 agreement and a regulatory services contract 

between ISE and a non-affiliated SRO. The 

Commission notes that ISE has not yet entered into 

such agreements. 

14 15 U.S.C. 78s(b)(2). 

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

affiliated SRO’’), will carry out oversight 

and enforcement responsibilities as the 

designated examining authority 

designated by the Commission pursuant 

to Rule 17d–1 under the Act 8 with the 

responsibility for examining Ballista 

Securities for compliance with 

applicable financial responsibility rules; 

• The Exchange shall enter into a 

plan pursuant to Rule 17d–2 under the 

Act 9 with a non-affiliated SRO to 

relieve the Exchange of regulatory 

responsibilities for Ballista Securities 

with respect to rules that are common 

rules between the Exchange and the 

SRO; 10

• With respect to unique ISE rules, 

ISE shall enter into a regulatory services 

contract with a non-affiliated SRO to 

perform certain regulatory 

responsibilities for Ballista Securities; 

• The regulatory services contract 

with the non-affiliated SRO shall 

require the Exchange to provide the 

non-affiliated SRO with information, in 

an easily accessible manner, regarding 

all exception reports, alerts, complaints, 

trading errors, cancellations, 

investigations, and enforcement matters 

(collectively, ‘‘exceptions’’) in which 

Ballista Securities is identified as a 

participant that has potentially violated 

ISE or Commission rules, and shall 

require that the non-affiliated SRO 

provide a report to the Exchange 

quantifying exceptions on not less than 

a quarterly basis; 

• ISE shall establish and maintain 

procedures and internal controls 

reasonably designed to ensure that 

Ballista Securities and its affiliates do 

not develop or implement changes to its 

systems on the basis of nonpublic 

information obtained as a result of ISE 

Holdings’ ownership interest in Ballista 

Securities, until such information is 

available generally to similarly situated 

members of the Exchange; and 

• The ownership interest of ISE 

Holdings in Ballista Securities is subject 

to the foregoing conditions and is 

approved on a temporary basis, for a 

period not to exceed one year. 

Additionally, ISE Holdings currently 

owns less than a 9% equity interest in 

Optifreeze and does not own a 

controlling interest in Optifreeze or 

otherwise have any veto or other special 

voting rights with respect to the 

management or operation of Optifreeze. 

The Exchange has acknowledged that 

neither it, nor any of its affiliates, may 

directly or indirectly increase its equity 

ownership in Optifreeze without prior 

Commission approval.11

The Commission finds the proposed 

limitations and conditions of Rule 

312(c) to be consistent with the Act, 

particularly Section 6(b)(5) 

thereunder.12 Although the Commission 

continues to be concerned about 

potential unfair competition and 

conflicts of interest between an 

exchange’s self-regulatory obligations 

and its commercial interest when the 

exchange, or one of its affiliates, holds 

an ownership interest in a member, the 

proposed conditions appear reasonably 

designed to mitigate concerns about 

potential conflicts of interest and unfair 

competitive advantage. The Commission 

believes that the oversight of Ballista 

Securities by a non-affiliated SRO,13

combined with the requirement that ISE 

provide the non-affiliated SRO with 

information regarding exceptions 

relating to Ballista Securities on not less 

than a quarterly basis, promote robust 

and independent regulation of Ballista 

Securities. ISE and Ballista Securities 

must also establish and maintain 

procedures and internal controls that 

are reasonably designed to prevent 

Ballista Securities and its affiliates from 

deriving any unfair informational 

advantage resulting from its relationship 

with ISE. Finally, the Commission 

believes that ISE’s proposal on a pilot 

basis will provide ISE and the 

Commission an opportunity to assess 

whether there might be any adverse 

consequences of the exception and 

whether a permanent exception is 

warranted. The Commission believes 

that, taken together, these limitations 

and conditions are reasonably designed 

to mitigate potential conflicts between 

the commercial interests of the 

Exchange or its parent company in 

Ballista Securities and the Exchange’s 

regulatory responsibilities with respect 

to Ballista Securities. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,14 that the 

proposed rule change (File No. SR–ISE– 

2009–45) is hereby approved on a pilot 

basis through September 1, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–21637 Filed 9–4–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60597; File No. SR–NYSE– 

2009–92] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by New York 

Stock Exchange LLC Extending Until 

September 8, 2009, the Operation of 

Interim NYSE Rule 128 Which Permits 

the Exchange To Cancel or Adjust 

Clearly Erroneous Executions if They 

Arise Out of the Use or Operation of 

Any Quotation, Execution or 

Communication System Owned or 

Operated by the Exchange, Including 

Those Executions That Occur in the 

Event of a System Disruption or 

System Malfunction 

August 31, 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 

31, 2009, New York Stock Exchange 

LLC (‘‘NYSE’’ 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 the Exchange. NYSE 

has designated the proposed rule change 

as constituting a rule change under Rule 

19b–4(f)(6) under the Act,3 which 

renders the proposal effective upon 

filing with the Commission. 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 extend 

until September 8, 2009, the operation 

of interim NYSE Rule 128 (‘‘Clearly 

Erroneous Executions for NYSE 

Equities’’) which permits the Exchange 

to cancel or adjust clearly erroneous 

executions if they arise out of the use or 

operation of any quotation, execution or 

communication system owned or 

operated by the Exchange, including 

those executions that occur in the event 


jlentini on DSKJ8SOYB1PROD with NOTICES
46282 Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Notices 

4See Securities Exchange Act Release No. 57323 

(February 13, 2008), 73 FR 9371 (February 20, 2008) 

(SR–NYSE–2008–09). 

5See Securities Exchange Act Release No. 57826 

(May 15, 2008), 73 FR 29802 (May 22, 2008) (SR– 

NASDAQ–2007–001). 

6See Securities Exchange Act Release No. 58328 

(August 8, 2008), 73 FR 47247 (August 13, 2008) 

(SR–NYSE–2008–63). 

7See Securities Exchange Act Release No. 58732 

(October 3, 2008), 73 FR 61183 (October 15, 2008) 

(SR–NYSE–2008–99). 

8See Securities Exchange Act Release No. 59255 

(January 15, 2009) 74 FR 4496 (January 26, 2009) 

(SR–NYSE–2009–02). 

9See Securities Exchange Act Release No. 59581 

(March 9, 2009) 74 FR 12431 (March 24, 2009) (SR– 

NYSE–2009–26). 

10See Securities Exchange Act Release No. 59838 

(April 28, 2009) 74 FR 20767 (May 5, 2009) (SR– 

NYSEArca–2009–36) (See NYSE Arca Rule 7.10). 

11See Securities Exchange Act Release No. 60131 

(June 17, 2009) 74 FR 30196 (June 24, 2009) (SR– 

NYSE–2009–57). 

12See Securities Exchange Act Release No. 60312 

(July 15, 2009) 74 FR 36298 (July 22, 2009) (SR– 

NYSE–2009–70). 

13See Securities Exchange Act Release No. 60419 

(August 7, 2009) 74 FR 39987 (August 10, 2009) 

(SR–NYSE–2009–79). 

14See Securities Exchange Act Release No. 60478 

(August 11, 2009) 74 FR 41769 (August 18, 2009) 

(SR–NYSE–2009–81). 

15See Securities Exchange Act Release No. 60563 

(August 21, 2009) 74 FR 44423 (August 28, 2009) 

(SR–NYSE–2009–87). 

16 15 U.S.C. 78f(a) [sic]. 

17 15 U.S.C. 78f(b)(5). 

of a system disruption or system 

malfunction. 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 extend 

until September 8, 2009, the operation 

of interim NYSE Rule 128 (‘‘Clearly 

Erroneous Executions for NYSE 

Equities’’) which permits the Exchange 

to cancel or adjust clearly erroneous 

executions if they arise out of the use or 

operation of any quotation, execution or 

communication system owned or 

operated by the Exchange, including 

those executions that occur in the event 

of a system disruption or system 

malfunction. 

Prior to the implementation of NYSE 

Rule 128 on January 28, 2008,4 the 

NYSE did not have a rule providing the 

Exchange with the authority to cancel or 

adjust clearly erroneous trades of 

securities executed on or through the 

systems and facilities of the NYSE. 

In order for the NYSE to be consistent 

with other national securities exchanges 

which have some version of a clearly 

erroneous execution rule, the Exchange 

is drafting an amended clearly 

erroneous rule which will accommodate 

such other exchanges but will be 

appropriate for the NYSE market model. 

The NYSE notes that the Commission 

approved an amended clearly erroneous 

execution rule for Nasdaq in May 2008.5

On July 28, 2008, the Exchange filed 

with the SEC a request to extend the 

operation of interim Rule 128 until 

October 1, 2008 6 in order to review the 

provisions of Nasdaq’s clearly erroneous 

rule and to consider integrating similar 

standards into its own amendment to 

Rule 128. On October 1, 2008 7, the 

Exchange filed with the SEC a further 

request to extend the operation of 

interim Rule 128 until January 9, 2009 

in order to consider integrating similar 

standards into the amendment to Rule 

128. On January 9, 2009 8, the Exchange 

filed with the SEC a request to extend 

the operation of interim Rule 128 until 

March 9, 2009, indicating that the 

Exchange was still in the process of 

reviewing the Nasdaq rule with a view 

towards incorporating certain 

provisions into the amendment of 

interim Rule 128. 

On February 10, 2009, NYSE Arca 

submitted a proposal to the SEC to 

amend its clearly erroneous rule. The 

NYSE Arca proposed rule differed in 

certain respects from the Nasdaq clearly 

erroneous rule. On March 9, 2009, the 

Exchange filed with the SEC a request 

to extend the operation of interim Rule 

128 until June 9, 2009 9 to finalize 

review of NYSE Arca’s proposed 

amended CEE rule, which included 

market wide CEE initiatives, to 

determine if it was appropriate to 

incorporate such provisions into the 

Rule 128 amendment. 

Thereafter, on April 24, 2009, NYSE 

Arca filed a revised rule change with the 

Commission to amend its clearly 

erroneous rule (NYSE Arca Rule 7.10).10

The Exchange was in the process of 

finalizing its review of NYSE Arca’s 

revised CEE rule change, which also 

included market wide CEE initiatives, to 

determine if it was appropriate to 

incorporate all such provisions into 

NYSE’s interim Rule 128 amendment. 

On June 9, 2009, the Exchange filed 

with the SEC a request to extend the 

operation of interim Rule 128 until July 

15, 2009 11 to finalize review of NYSE 

Arca’s proposed amended CEE rule. On 

July 15, 2009 12 the Exchange filed with 

the SEC a request to extend the 

operation of interim Rule 128 until 

August 1, 2009 to finalize review of 

NYSE Arca’s proposed amended CEE 

rule. On July 31, 2009 the Exchange 

filed with the SEC a request to extend 

the operation of interim Rule 128 until 

August 10, 2009 13 to finalize review of 

NYSE Arca’s proposed amended CEE 

rule. On August 11, 2009 the Exchange 

filed with the SEC a request to extend 

the operation of interim Rule 128 until 

August 21, 2009 14 to finalize review of 

NYSE Arca’s proposed amended CEE 

rule. On August 21, 2009 the Exchange 

filed with the SEC a request to extend 

the operation of interim Rule 128 until 

August 31, 2009 15 to finalize review of 

NYSE Arca’s proposed amended CEE 

rule. 

The Exchange anticipates finalizing 

proposed rule text of its clearly 

erroneous execution rule shortly, and is, 

therefore, requesting to extend the 

operation of interim Rule 128 until 

September 8, 2009. Prior to September 

8, 2009, the Exchange intends to 

formally file a 19b–4 rule change 

amending interim Rule 128. 

2. Statutory Basis 

The basis under the Securities 

Exchange Act of 1934 (the ‘‘Act’’) 16 for 

this proposed rule change is the 

requirement under Section 6(b)(5) 17

that an Exchange have rules that are 

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. 

As articulated more fully in the 

‘‘Purpose’’ Section above, the proposed 

rule would place the NYSE on equal 

footing with other national securities 

exchanges. This will promote the 

integrity of the market and protect the 

public interest, since it would permit all 

exchanges to cancel or adjust clearly 

erroneous trades when such trades 

occur, rather than canceling them on all 

other markets, but leaving them 

standing on only one market. 


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Federal Register / Vol. 74, No. 172 / Tuesday, September 8, 2009 / Notices 46283 

18 15 U.S.C. 78s(b)(3)(A). 

19 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6) requires a self-regulatory organization to give 

the Commission written notice of its intent to file 

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 has determined to 

waive the five-day pre-filing period in this case. 

20 17 CFR 240.19b–4(f)(6). 

21 17 CFR 240.19b–4(f)(6). 

22For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

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

23 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Commission notes that Exhibit 5 is attached 

to the rule filing filed with the Commission but not 

to this release. The text of the proposed rule change 

is available at BX, on its Web site (http:// 

nasdaqomxbx.cchwallstreet.com), and at the 

Commission’s Public Reference Room. 

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: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 18 and Rule 19b– 

4(f)(6) thereunder.19

A proposed rule change filed 

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

Act 20 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6) 21

permits the Commission to designate a 

shorter time if such action is consistent 

with the protection of investors and the 

public interest. NYSE requests that the 

Commission waive the 30-day operative 

delay because the Exchange believes 

that the absence of such a rule in an 

automated and fast-paced trading 

environment poses a danger to the 

integrity of the markets and the public 

interest. NYSE notes that immediate 

effectiveness of the proposed rule 

change will immediately and timely 

enable NYSE to cancel or adjust clearly 

erroneous trades that may present a risk 

to the integrity of the equities markets 

and all related markets. The 

Commission believes that waiving the 

30-day operative delay 22 is consistent 

with the protection of investors and the 

public interest because such waiver will 

permit the Exchange to continue 

operation of interim NYSE Rule 128 on 

an uninterrupted basis, and therefore 

designates the proposal operative upon 

filing. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

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–NYSE–2009–92 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–NYSE–2009–92. 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 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 publicly available. All 

submissions should refer to File 

Number SR–NYSE–2009–92 and should 

be submitted on or before September 29, 

2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–21636 Filed 9–4–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60592; File No. SR–BX– 

2009–050] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change To Modify Fees 

for Members Using the NASDAQ OMX 

BX Equities System 

August 31, 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 

17, 2009, NASDAQ OMX BX, Inc. 

(‘‘BX’’) filed with the Securities and 

Exchange Commission (‘‘Commission’’) 

the proposed rule change as described 

in Items I, II, and III below, which Items 

have been prepared by the Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

BX is filing a proposed rule change to 

modify pricing for BX members using 

the NASDAQ OMX BX Equities System. 

BX will implement the proposed rule 

change on September 1, 2009. The text 

of the proposed rule change is attached 

as Exhibit 5 and is available at http:// 

nasdaqomxbx.cchwallstreet.com.3


jlentini on DSKJ8SOYB1PROD with NOTICES