Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Notices 51921 

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

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

13 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 Exchange has satisfied this 

requirement. 

14 17 CFR 240.19b–4(f)(6). 

15 17 CFR 240.19b–4(f)(6). 

16For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposal’s impact on efficiency, competition, and 

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

17See Securities Exchange Act Release No. 60706 

(September 22, 2009) 74 FR 49416 (September 28, 

2009) (NYSEArca–2009–36). 

18 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

Act,11 because it would promote just 

and equitable principles of trade, 

remove impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system. The 

proposed rule change provides 

transparency and finality for 

participants and creates consistent 

results across U.S. equities exchanges 

with respect to clearly erroneous 

executions. This proposed change 

further promotes the maintenance of a 

fair and orderly market, the protection 

of investors and the protection of the 

public interest. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change imposes any 

burden on competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange has neither solicited 

nor received written comments on 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 12 and Rule 19b– 

4(f)(6) thereunder.13

A proposed rule change filed 

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

Act 14 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6) 15

permits the Commission to designate a 

shorter time if such action is consistent 

with the protection of investors and the 

public interest. The Exchange requests 

that the Commission waive the 30-day 

operative delay so that it may 

implement the new rule on October 5, 

2009, the same date as the other equities 

exchanges. The Commission believes 

that waiving the 30-day operative delay 

is consistent with the protection of 

investors and the public interest 

because it will allow the Exchange to 

begin applying the new rule on the same 

date as the other equities exchanges.16

Application of the new rule on this date 

should help foster transparency and 

consistency among those exchanges that 

adopt clearly erroneous execution rules 

substantially similar to those previously 

approved by the Commission.17 For 

these reasons, the Commission 

designates that the proposed rule 

change become operative on October 5, 

2009. 

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–BATS–2009–030 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–BATS–2009–030. 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–BATS–2009–030 and 

should be submitted on or before 

October 29, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.18

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–24247 Filed 10–7–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60782; File No. SR– 

NYSEAmex–2009–69] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by NYSE 

Amex LLC Amending NYSE Amex 

Equities Rule 128 Governing Clearly 

Erroneous Executions for NYSE Amex 

Equities 

October 2, 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 October 

2, 2009, NYSE Amex LLC (‘‘Exchange’’ 

or ‘‘NYSE Amex’’) 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 Amex has 

designated the proposed rule change as 

constituting a rule change under Rule 

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51922 Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Notices 

3 17 CFR 240.19b–4(f)(6). 

4For purposes of this Rule, ‘‘removed from the 

Consolidate Tape’’ means that a subsequent 

message will be sent to the Consolidated Tape 

indicating that a previously executed trade has been 

cancelled. 5NYSE Amex Equities Rule 128(b). 

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 amend 

NYSE Amex Equities Rule 128 (Clearly 

Erroneous Executions for NYSE Amex 

Equities) governing clearly erroneous 

executions for NYSE Amex equities. 

The text of the proposed rule change is 

available at the Exchange, the 

Commission’s Public Reference Room, 

and http://www.nyse.com. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Rule 128 in order to improve the 

Exchange’s policies and procedures 

regarding clearly erroneous executions 

that occur on the NYSE Amex equities 

and on other national market centers. 

The proposed changes are part of a 

market-wide effort designed to provide 

transparency and finality with respect to 

clearly erroneous executions. This effort 

seeks to achieve consistent results for 

participants across U.S. equities 

exchanges while maintaining a fair and 

orderly market, protecting investors and 

protecting the public interest. The 

proposed changes are more fully 

discussed below. 

Definition 

The Exchange will maintain the 

meaning of the definition of a clearly 

erroneous execution, but proposes to 

add clarifying language with respect to 

cancelled trades. The proposed change 

identifies that when a clearly erroneous 

execution occurs and both parties agree 

to cancel the execution and when a 

trade is determined by the Exchange to 

be clearly erroneous such executions 

will be removed ‘‘from the Consolidated 

Tape.’’ 4 A trade will be removed from 

the Consolidated Tape only when the 

determination is deemed final and any 

applicable appeals have been exhausted. 

Member or Member Organization 

Initiated Review Requests 

The Exchange proposes to amend 

Rule 128 to update the procedures for 

requesting a review of a clearly 

erroneous execution. First, and 

throughout Rule 128, the term ‘‘Officer’’ 

will be defined as an Officer of the 

Exchange or such other senior level 

employee designee. Next, the proposed 

rule will require that requests for review 

be made by electronic mail (‘‘e-mail’’) or 

other electronic means specified from 

time to time by the Exchange, except for 

market participants who trade on the 

Floor of the Exchange, who will 

continue to be permitted to make such 

requests for review in person on the 

Floor of the Exchange. Requiring 

requests for review to be made 

electronically, except those requests 

made in person on the Floor of the 

Exchange, creates a standard format that 

can easily be logged and tracked. The 

Exchange will continue to publish the email address and other electronic means 

to be used for all clearly erroneous 

filings in a circular distributed to 

members and member organizations. 

The Exchange further proposes that 

requests for review must be received by 

the Exchange within thirty (30) minutes 

of the execution time for orders initially 

routed to and executed on the Exchange. 

The Exchange proposes that members 

and member organizations submit 

certain essential identifying information 

with the request including the time of 

the execution(s), security symbol(s), 

number of shares, price(s), side (bought 

or sold), and factual basis for believing 

that the trade is clearly erroneous. The 

current rule requires requests for review 

to be received within fifteen (15) 

minutes of the execution and does not 

specify what information is required. 

The Exchange believes that thirty (30) 

minutes is an appropriate time frame 

that offers the requesting party sufficient 

time to gather and submit all required 

information. 

The proposed rule also requires the 

Exchange to notify the counterparty to 

a trade upon receipt of a timely filed 

request for review that satisfies the 

Numerical Guidelines set forth within 

the rule. This proposed language 

eliminates the requirement that 

counterparties be notified of every 

request for a ruling and instead requires 

notice only when a request is filed in a 

timely manner and satisfies the 

Numerical Guidelines. This change 

alleviates the burden on the Exchange of 

notifying the counterparty when a 

request for review does not merit a 

ruling. 

The Exchange proposes to amend 

Rule 128 to allow an Officer to request 

additional information from each party 

to an execution under review. Parties to 

an execution under review will have 

thirty (30) minutes from the time of the 

request to provide additional supporting 

information. 

Routed Executions 

The Exchange proposes to give other 

market centers an additional thirty (30) 

minutes from the receipt of their 

participant’s timely filing to request a 

ruling, but no longer than sixty (60) 

minutes from the time of the execution 

under review. This provision accounts 

for those executions initially directed to 

an away market center and subsequently 

routed by that away market center to the 

Exchange. 

For example, assume an order is 

initially routed by a participant to 

Market Center A and subsequently 

routed to the NYSE Amex where the 

order is executed at a price outside of 

the Numerical Guidelines. This 

provision generally requires Market 

Center A to file with the Exchange 

within thirty (30) minutes from the time 

it receives its participant’s timely filed 

request for review. This provision caps 

the filing deadline for an away market 

center at sixty (60) minutes from the 

time of the execution under review. 

Threshold Factors 

Currently, the Exchange’s Clearly 

Erroneous Execution rule does not 

identify specific numeric guidelines for 

determining what constitutes a clearly 

erroneous execution. The current rule 

simply provides that ‘‘an Officer of the 

Exchange * * * shall review the 

transaction * * * and determine 

whether it is clearly erroneous, with a 

view toward maintaining a fair and 

orderly market and the protection of 

investors and the public interest.’’ 5 In 

practice, the Exchange currently 

incorporates the internal guidelines in 

the Exchange’s Clearly Erroneous 

Execution policy. The Exchange 

proposes adding certain numerical 

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Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Notices 51923 

thresholds to the Rule that explicitly 

state what constitutes, among other 

factors, a possible clearly erroneous 

execution. 

Numerical Guidelines 

The proposed Numerical Guidelines 

state that an execution executed during 

the regular trading hours and after hours 

of the Exchange may be found to be 

clearly erroneous only if the price of the 

execution to buy is greater, or less in the 

case of a sale, than the Reference Price 

by an amount that equals or exceeds the 

numerical guidelines for a particular 

execution category. The execution time 

of the transaction under review 

determines whether the Numerical 

Guideline applied is for the regular 

trading hours or the after hours of the 

Exchange. The Reference Price shall be 

equal to the Consolidated Last Sale 

immediately prior to the execution 

under review, unless unusual 

circumstances are present. The 

proposed guidelines for sales greater 

than $0.00 up to and including $25.00 

are 10% for the regular trading hours 

and 20% for the after hours of the 

Exchange. The proposed guidelines for 

sales greater than $25.00 up to and 

including $50.00 are 5% for the regular 

trading hours and 10% for the after 

hours of the Exchange. The proposed 

guidelines for sales greater than $50.00 

are 3% for the regular trading hours and 

6% for the after hours of the Exchange. 

A filing involving five or more securities 

by the same member or member 

organization will be aggregated into a 

single filing called a ‘‘Multi-Stock 

Event.’’ In the case of a Multi-Stock 

Event, the proposed guidelines are 10% 

per security for the regular trading hours 

and after hours of the Exchange. In the 

case of Leveraged ETF/ETN securities, 

the above guidelines are to be 

multiplied by the leverage multiplier of 

the security. Executions that do not 

meet or exceed the Numerical 

Guidelines will not be eligible for 

review under this section. The following 

chart summarizes the proposed 

Numerical Guidelines. 

Reference price: Consolidated last sale 

Regular 

trading hours of the 

exchange numerical guidelines 

(subject execution’s % difference from the 

consolidated last sale) 

After hours of the exchange numerical 

guidelines 

(subject execution’s % difference from the 

consolidated last sale) 

Greater than $0.00 up to and including $25.00 10% .................................................................. 20%. 

Greater than $25.00 up to and including 

$50.00.

5% .................................................................... 10%. 

Greater than $50.00 .......................................... 3% .................................................................... 6%. 

Multi-Stock Event—Filings involving five or 

more securities by the same member or 

member organization will be aggregated into 

a single filing.

10% .................................................................. 10%. 

Leveraged ETF/ETN securities ......................... Regular Trading Hours of the Exchange Numerical Guidelines multiplied by the leverage multiplier (i.e. 2×).After Hours of the Exchange Numerical Guidelines multiplied by the leverage multiplier 

(i.e. 2×). 

Establishing Numerical Guidelines 

within the Rule brings regulatory 

transparency and consistency in the 

application of the rules of the Exchange. 

These Numerical Guidelines represent 

the general consensus approach and 

were developed based on the collective 

experiences of a market-wide group. 

The Exchange believes that the 

thresholds established are fair and 

appropriate and apply evenly to all 

participants. 

Unusual Circumstances 

The Exchange further proposes that in 

Unusual Circumstances the Exchange 

may, in its discretion and with a view 

toward maintaining a fair and orderly 

market and the protection of investors 

and the public interest, use a Reference 

Price other than the consolidated last 

sale. Unusual Circumstances may 

include periods of extreme market 

volatility, sustained illiquidity, or 

widespread system issues. Other 

Reference Prices that the Exchange may 

use would include the consolidated 

inside price, the consolidated opening 

price, the consolidated prior close, or 

the consolidated last sale prior to a 

series of executions. 

The following example explains the 

use of a Reference Price equal to the 

consolidated last sale prior to a series of 

executions. 

ABC has a consolidated last sale of 

$10.00. During the regular trading hours 

of the Exchange Customer A enters a 

market order to buy 10,000 shares, 

although it had intended a market order 

for 1,000 shares. The size of the order 

is such that the order sweeps the NYSE 

Amex Display Book, which reflects 

1,000 shares of liquidity offered at each 

of following prices. Executions occur, 

moving through the depth of Book, as 

follows: 

Trade #1–1,000 shares @ $10.00 (9,000 

remaining) 

Trade #2–1,000 shares @ $10.20 (8,000 

remaining) 

Trade #3–1,000 shares @ $10.40 (7,000 

remaining) 

Trade #4–1,000 shares @ $10.60 (6,000 

remaining) 

Trade #5–1,000 shares @ $10.80 (5,000 

remaining) 

Trade #6–1,000 shares @ $11.00 (4,000 

remaining) 

Trade #7–1,000 shares @ $11.20 (3,000 

remaining) 

Trade #8–1,000 shares @ $11.40 (2,000 

remaining) 

Trade #9–1,000 shares @ $11.60 (1,000 

remaining) 

Trade #10–1,000 shares @ $11.80 (complete) 

Thus, to be eligible for review, an 

execution must be at a price that is at 

least 10% higher than the consolidated 

last sale prior to the series of executions. 

Customer A could request a ruling for 

trades #6 through #10, priced at $11.00 

and above, but trades #1 through #5 

would not be eligible for review. 

Under the proposed rule the Exchange 

may also use a higher Numerical 

Guideline if, after market participants 

have been alerted to erroneous activity, 

the price of the security returns toward 

its prior trading range but continues to 

trade at a price beyond the Numerical 

Guidelines. 

Joint Market Rulings 

In the interest of achieving 

consistency across markets, the 

Exchange proposes that, in events that 

involve other markets, the Exchange 

would have the ability to use a different 

Reference Price and/or Numerical 

Guideline. In these instances the 

Reference Price would be determined 

based on a consensus among the 

Exchanges where the executions 

occurred. Furthermore, when a ruling is 

made across markets, the Exchange may 

determine that the ruling is not eligible 

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51924 Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Notices 

for appeal because immediate finality is 

necessary to maintain a fair and orderly 

market and to protect investors and the 

public interest. While the Exchange will 

coordinate its review of a clearly 

erroneous execution with other affected 

market centers with the goal of 

rendering consistent results across the 

market, the Exchange is not bound by 

joint market rulings when such rulings 

would violate other NYSE Amex 

equities rules or are inconsistent with 

internal policies of the Exchange. 

Additional Factors 

The proposed amendments to Rule 

128 also enumerate some additional 

factors that an Officer may consider 

when determining whether an execution 

is clearly erroneous. These factors 

include, but are not limited to, system 

malfunctions or disruptions, volume 

and volatility for the security, derivative 

securities products that correspond to 

greater than 100% in the direction of a 

tracking index, news released for the 

security, whether trading in the security 

was recently halted/resumed, whether 

the security is an IPO, whether the 

security was subject to a stock-split, 

reorganization, or other corporate 

action, overall market conditions, 

Opening and Late Session executions, 

validity of the consolidated tape’s trades 

and quotes, consideration of primary 

market indications, Liquidity 

Replenishment Points (‘‘LRPs’’), Depth 

Guidelines and executions inconsistent 

with the trading pattern in the stock. 

Each additional factor shall be 

considered with a view toward 

maintaining a fair and orderly market, 

the protection of investors and the 

public interest. 

Numerical Guidelines Applicable to 

Volatile Market Opens 

The Exchange proposes to give the 

Exchange the ability to expand the 

Numerical Guidelines applicable to 

executions occurring between 9:30 a.m. 

and 10 a.m. based on the disseminated 

value of the S&P 500 Futures at 9:15 

a.m. When the S&P Futures are up or 

down 3% up to but not including 5% 

at 9:15 a.m., the Numerical Guidelines 

are doubled. When the S&P Futures are 

up or down 5% or greater at 9:15 a.m., 

the Numerical Guidelines are tripled. 

The Exchange believes that the S&P 500 

futures contract is an appropriate and 

reliable barometer of market activity 

prior to the market opening due to its 

broad based market coverage and deep 

liquidity. Using the S&P 500 Futures 

disseminated value at 9:15 a.m. as the 

barometer of market activity, the 

Exchange is providing a transparent 

means of offering adjusted guidelines in 

times of volatile market activity. 

Outlier Executions 

The proposed amendments to Rule 

128 provide that the Officer may 

consider requests for review received 

after thirty (30) minutes, but not longer 

than sixty (60) minutes after the 

execution in question in the case of an 

Outlier Execution. An Outlier Execution 

is an execution where, (1) the execution 

price of the security is greater than three 

times the current Numerical Guidelines, 

or (2) the execution price of the security 

breaches the 52-week high or low, in 

which case the Exchange may consider 

Additional Factors to determine if the 

execution qualifies for review or if the 

Exchange shall decline to act. 

Review Procedures 

Initial Determination 

Under the current rule, if the Officer 

determines that the execution is not 

clearly erroneous, the Officer shall not 

take any action in connection with the 

completed execution. In the event that 

the Officer determines that the 

execution in dispute is clearly 

erroneous, the Officer shall either 

declare the execution null and void or 

modify one or more of the terms of the 

transaction to achieve an equitable 

rectification of the error that would 

place the parties in the same position, 

or as close as possible to the same 

position that they would have been in, 

had the error not occurred. In the 

proposed rule, in the event the Officer 

determines there is a clearly erroneous 

execution, the Officer may declare the 

execution null and void or, if such 

transaction occurred only on the 

Exchange and no contemporaneous 

transaction(s) occurred on another 

market center(s) at a price that meets or 

exceeds the applicable Numerical 

Guidelines and if the Exchange has no 

actual knowledge of a clearly erroneous 

execution review of a contemporaneous 

transaction of the subject security on 

another market center, modify one or 

more of the terms of the transaction to 

achieve an equitable rectification of the 

error that would place the parties in the 

same position, or as close as possible to 

the same position that they would have 

been in, had the error not occurred. 

For purposes of the proposed Rule, a 

transaction will be considered to have 

been contemporaneous if it was 

reported to the Consolidated Tape 

within a reasonable time frame of the 

transaction under review. Such time 

frame shall be determined by the Officer 

at the time of the clearly erroneous 

determination based on the liquidity of 

the relevant security, but shall in no 

case be less than one (1) second before 

or after the time of execution on the 

Exchange. In assessing whether there 

was a contemporaneous transaction on 

another market center, the Exchange 

will consider the existence of any 

clearly erroneous review of a transaction 

in the subject security on another 

market center of which it has actual 

knowledge, which may be indicative 

that the transaction under review on 

such other market center was 

contemporaneous with the transaction 

under review on the Exchange. 

However, the Exchange will not be 

required to initiate communication with 

other market centers to determine the 

existence of any such review(s). 

For purposes of the proposed rule, 

whenever the rule provides authority for 

the Officer to modify or adjust a clearly 

erroneous execution, in addition to the 

Officer’s ability to declare a clearly 

erroneous execution null and void, the 

Officer’s authority to modify or adjust 

the clearly erroneous execution is 

subject to the conditions that there were 

no contemporaneous transactions on 

other markets and that the Exchange 

had no actual knowledge of a clearly 

erroneous execution review of a 

contemporaneous transaction of the 

subject security on another market 

center, as described above. 

The Exchange also proposes adding 

language stating that a determination 

shall be made generally within thirty 

(30) minutes of receipt of the complaint, 

but in no case later than the start of the 

regular trading hours of the Exchange on 

the following trading day. Rulings made 

outside of thirty (30) minutes by an 

Officer will not fail for lack of 

timeliness. The guideline simply 

provides participants an appropriate 

expectation that a ruling will generally 

be made within thirty (30) minutes and 

in no case later than the start of the 

regular trading hours of the Exchange on 

the following trading day. 

Appeals 

The Exchange proposes to amend the 

appeals procedure for trades that are 

deemed to be clearly erroneous. First, 

the Exchange will no longer accept 

appeal requests via facsimile. Similar to 

the proposed language for an initial 

request for a ruling, all appeal requests 

must be made via e-mail, except for 

those requests for appeals from 

Exchange members who trade on the 

Floor of the Exchange. Members who 

trade on the Floor of the Exchange may 

also submit requests for appeals in 

person from the Floor. 

The current rule provides that the 

Exchange shall review and render a 

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Notices 51925 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(5). 

decision upon an appeal within a 

timeframe provided by the Exchange. 

The proposed rule offers more definite 

guidelines to ensure the expedient 

resolution of appeals. It requires the 

Exchange to review appeals as soon as 

practicable, but generally on the same 

day as the executions under review. 

Appeal requests received between 3 ET 

and the close of trading should be made 

as soon as practicable, but in no case 

later than the trading day following the 

date of the execution under review. 

Appeal decisions will not fail for lack of 

timeliness. This revised provision 

provides participants a reasonable 

expectation of when a ruling on appeal 

will generally be made. 

Further, the proposed rule declares 

that any determination made by an 

Officer or by the CEE Panel shall be 

rendered without prejudice as to the 

right of the parties to the execution to 

submit their dispute to arbitration. This 

provision simply clarifies the fact that 

nothing in the proposed rule limits or 

impedes the rights of the parties to 

arbitrate their dispute. 

System Disruption and Malfunctions 

Currently, within the System 

Disruptions and Malfunctions section of 

the Rule, after an Officer determines 

that a trade was clearly erroneous he 

may declare the execution null and void 

or modify the trade to attempt to 

achieve an equitable rectification of the 

error. Under the proposed rule, when 

the Office determines that an execution 

is clearly erroneous, the officer shall 

either declare the transaction null and 

void or, if such transaction occurred 

only on the Exchange and no 

contemporaneous transaction(s) 

occurred on another market center(s) at 

a price that meets or exceeds the 

applicable Numerical Guidelines and if 

the Exchange has no actual knowledge 

of a clearly erroneous execution review 

of a contemporaneous transaction of the 

subject security on another market 

center, modify one or more of the terms 

of the transaction to achieve an 

equitable rectification of the error that 

would place the parties in the same 

position, or as close as possible to the 

same position that they would have 

been in, had the error not occurred. This 

rule change supports the goal to provide 

market-wide consistency to the 

resolution of clearly erroneous 

executions that occur on multiple 

markets. 

The proposed rule also provides that, 

in the event of a disruption or a 

malfunction, the Officer will rely on the 

proposed Numerical Guidelines in 

determining whether an execution is 

clearly erroneous. However, the Officer 

may also use a lower Numerical 

Guideline if necessary to maintain a fair 

and orderly market, protect investors, 

and protect the public interest. The 

proposed rule also adds that actions 

taken under these circumstances must 

be taken within thirty (30) minutes of 

detection of the erroneous execution in 

the ordinary case, and by no later than 

the start of the regular trading hours of 

the Exchange on the day following the 

date of the execution under review 

when extraordinary circumstances exist. 

Officers Acting on Their Own Motion 

The Exchange proposes to add a 

section to the Rule that will grant an 

Officer the ability to act on his or her 

own motion to review potentially 

erroneous executions. Under the current 

rule, an Officer has the ability to act 

upon his or her own motion only in the 

event of a System Disruption or 

Malfunction. The proposed rule would 

allow an Officer to review executions 

and rely on the Numerical Guidelines 

under any circumstance. 

Under the proposed rule, an Officer 

acting on its own motion, may review 

potentially erroneous executions that 

occur on the Exchange and shall either 

declare the transaction null and void or, 

if such transaction occurred only on the 

Exchange and no contemporaneous 

transaction(s) occurred on another 

market center(s) at a price that meets or 

exceeds the applicable Numerical 

Guidelines and if the Exchange has no 

actual knowledge of a clearly erroneous 

execution review of a contemporaneous 

transaction of the subject security on 

another market center, modify one or 

more of the terms of the transaction to 

achieve an equitable rectification of the 

error that would place the parties in the 

same position, or as close as possible to 

the same position that they would have 

been in, had the error not occurred. This 

rule change supports the goal to provide 

market-wide consistency to the 

resolution of clearly erroneous 

executions that occur on multiple 

markets. 

In extraordinary circumstances an 

Officer may apply a lower Numerical 

Guideline to review a trade if it is 

determined that such action is necessary 

to maintain a fair and orderly market or 

protect investors and the public interest. 

In some instances the Exchange may 

detect a single execution that breaches 

the Numerical Guidelines but is not the 

subject of a ruling request. This 

provision gives the Exchange the ability 

to review such executions. Additionally, 

in practice clearly erroneous executions 

may involve multiple parties and 

multiple executions. The Exchange 

proposes this provision to permit an 

Officer to rule on a group of executions 

related to the same occurrence or event 

as a whole, with or without a formal 

request for a ruling from an affected 

party. 

Trade Nullification and Price 

Adjustments for UTP Securities That 

Are the Subject of Initial Public 

Offerings 

The proposed Rule also modifies the 

Exchange’s policy on trade nullification 

and UTP securities that are subject to 

initial public offerings. Under the 

current Rule, a clearly erroneous 

execution may be deemed to have 

occurred in the opening execution of the 

subject security if the execution price of 

the opening execution on the Exchange 

is the lesser of $1.00 or 10% away from 

the opening price on the listing 

exchange or association. Under the 

proposed rule, in such circumstances, 

the Officer shall either decline to take 

action in connection with the completed 

transaction, declare the transaction null 

and void or, if such transaction occurred 

only on the Exchange and no 

contemporaneous transaction(s) 

occurred on another market center(s) at 

a price that meets or exceeds the 

applicable Numerical Guidelines and if 

the Exchange has no actual knowledge 

of a clearly erroneous execution review 

of a contemporaneous transaction of the 

subject security on another market 

center, adjust the transaction price to 

the opening price on the listing 

exchange or association. 

Pursuant to the proposed rule, clearly 

erroneous executions of subsequent 

executions of the subject security will 

be reviewed in the same manner as the 

procedure set forth in (e)(1). Absent 

extraordinary circumstances, action of 

the Officer must be taken in a timely 

fashion, generally within thirty (30) 

minutes of the detection of the 

erroneous execution. In extraordinary 

circumstances, the reviewing Officer 

may take action by no later than the 

start of the regular trading hours of the 

Exchange on the day following the date 

of the execution under review. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) 6 of the 

Securities Exchange Act of 1934 (the 

‘‘Exchange Act’’), in general, and 

furthers the objectives of Section 

6(b)(5) 7 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 

mstockstill on DSKH9S0YB1PROD with NOTICES

51926 Federal Register / Vol. 74, No. 194 / Thursday, October 8, 2009 / Notices 

8 15 U.S.C. 78s(b)(3)(A). 

9 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 Exchange has satisfied this 

requirement. 

10 17 CFR 240.19b–4(f)(6). 

11 17 CFR 240.19b–4(f)(6). 

12For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposal’s impact on efficiency, competition, and 

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

13See Securities Exchange Act Release No. 60706 

(September 22, 2009), 74 FR 49416 (September 28, 

2009) (NYSEArca–2009–36). 

14 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

coordination with persons engaged in 

facilitating transactions in securities, 

and to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system. The proposed rule change 

provides transparency and finality for 

participants and creates consistent 

results across U.S. equities exchanges 

with respect to clearly erroneous 

executions. This proposed change 

further promotes the maintenance of a 

fair and orderly market, the protection 

of investors and the protection of the 

public interest. 

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 8 and Rule 19b– 

4(f)(6) thereunder.9

A proposed rule change filed 

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

Act 10 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6) 11

permits the Commission to designate a 

shorter time if such action is consistent 

with the protection of investors and the 

public interest. The Exchange requests 

that the Commission waive the 30-day 

operative delay so that it may 

implement the new rule on October 5, 

2009, the same date as the other equities 

exchanges. The Commission believes 

that waiving the 30-day operative delay 

is consistent with the protection of 

investors and the public interest 

because it will allow the Exchange to 

begin applying the new rule on the same 

date as the other equities exchanges.12

Application of the new rule on this date 

should help foster transparency and 

consistency among those exchanges that 

adopt clearly erroneous execution rules 

substantially similar to those previously 

approved by the Commission.13 For 

these reasons, the Commission 

designates that the proposed rule 

change become operative on October 5, 

2009. 

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–NYSEAmex–2009–69 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–NYSEAmex–2009–69. 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–NYSEAmex–2009–69 and 

should be submitted on or before 

October 29, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–24246 Filed 10–7–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60781; File No. SR–NYSE– 

2009–103] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by New York 

Stock Exchange LLC Amending NYSE 

Interim Rule 128 Governing Clearly 

Erroneous Executions for NYSE 

Equities 

October 2, 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 October 

2, 2009, the New York Stock Exchange 

LLC (‘‘Exchange’’ or ‘‘NYSE’’) 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 

mstockstill on DSKH9S0YB1PROD with NOTICES