23532 Federal Register / Vol. 77, No. 76 / Thursday, April 19, 2012 / Notices 

8 15 U.S.C. 78f(b). 

9 15 U.S.C. 78f(b)(5). 

10 15 U.S.C. 78s(b)(3)(A). 

11 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. 17 CFR 240.19b-4(f)(6). 

12 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4 . 

3See Securities Exchange Act Release No. 66481 

(February 28, 2012), 77 FR 13159 (‘‘Notice’’). 

of the Act 8 in general, and furthers the 

objectives of Section 6(b)(5) of the Act 9

in particular, in that it is designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general to protect 

investors and the public interest. The 

proposed rule change would permit the 

Exchange to set a minimum quotation 

size requirement on a class by class 

basis, provided the minimum size is at 

least one contract. Phlx believes that 

this flexibility will enable the Exchange 

to take into consideration market 

conditions and the trading and liquidity 

in a particular option class and its 

underlying security. 

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 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 either 

solicited or received. 

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 after the date of 

the filing, or such shorter time as the 

Commission may designate, it has 

become effective pursuant to 19(b)(3)(A) 

of the Act 10 and Rule 19b–4(f)(6) 11

thereunder. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend 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. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

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 email to rulecomments@sec.gov. Please include File 

Number SR–Phlx–2012–49 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–Phlx–2012–49. This file 

number should be included on the 

subject line if email 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 Web site viewing and 

printing 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 the 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 

available publicly. All submissions 

should refer to File Number SR–Phlx– 

2012–49 and should be submitted on or 

before May 10, 2012. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–9407 Filed 4–18–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66809; File No. SR– 

NYSEAmex–2012–10] 

Self-Regulatory Organizations; NYSE 

Amex LLC; Order Granting Approval of 

a Proposed Rule Change Amending 

NYSE Amex Rule 476A To Update Its 

‘‘List of Equities Rule Violations and 

Fines Applicable Thereto’’ 

April 13, 2012. 

I. Introduction 

On February 16, 2012, NYSE Amex 

LLC (‘‘Exchange’’ or ‘‘NYSE Amex’’) 

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 Amex Rule 

476A to update its ‘‘List of Equities Rule 

Violations and Fines Applicable 

Thereto.’’ The proposed rule change was 

published for comment in the Federal 

Register on March 5, 2012.3 The 

Commission received no comment 

letters on the proposed rule change. 

This order approves the proposed rule 

change. 

II. Description 

By way of background, NYSE Amex 

Rule 476 governs disciplinary 

proceedings involving charges against 

members, member organizations, 

principal executives, approved persons, 

employees, or others for violations of 

the federal securities laws, Exchange 

rules and agreements with the 

Exchange, and other offenses listed in 

the rule. 

NYSE Amex Rule 476A, ‘‘Imposition 

of Fines for Minor Violation(s) of 

Rules,’’ provides that, in lieu of 

commencing a disciplinary proceeding 

under Rule 476, the Exchange may 

(subject to specified requirements) 

‘‘impose a fine, not to exceed $5,000, on 

any member, member organization, 

principal executive, approved person, or 

registered or non-registered employee of 

a member or member organization, for 

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Federal Register / Vol. 77, No. 76 / Thursday, April 19, 2012 / Notices 23533 

4NYSE Amex Rule 476A(a). 

5For a more detailed description of these 

changes, see Notice, supra note 3. 

6NYSE Amex Equities Rule 104 currently 

operates on a pilot basis, set to end on July 31, 

2012. The Exchange stated its belief that the Rule 

476A List should reference those rules that are 

currently operational, even if operating on a pilot 

basis. 

7See Notice, supra note 3 at 13160–61 for a full 

description of the elements of Rule 104 that, under 

the proposal, would be included in the Minor Rule 

Violation Plan. The Exchange states that other 

elements of Rule 104 (i.e., Rule 104(j) and 

supplementary material .05) are not related to DMM 

obligations, but rather reflect operational aspects of 

the Exchange. See id. at note 8. The Exchange notes 

that, in a separate filing, it has proposed to delete 

NYSE Amex Equities Rule 104(a)(6). See Securities 

Exchange Act Release No. 65735 (November 10, 

2011), 76 FR 71405 (November 17, 2011) (SR– 

NYSEAmex–2011–86). The Commission instituted 

proceedings to determine whether to disapprove 

SR–NYSEAmex–2011–86. See Securities Exchange 

Act Release No. 66397 (February 15, 2012), 77 FR 

10586 (February 22, 2012). 

8See Securities Exchange Act Release No. 63255 

(November 5, 2010), 75 FR 69484 (November 12, 

2010) (SR–NYSEAmex–2010–96). 

9At the time of filing of this proposed rule 

change, ‘‘violations of Exchange policies regarding 

procedures to be followed in delayed opening 

situations’’ were eligible for summary fines under 

the NYSE Minor Rule Violation Plan. According to 

the Exchange, such policies are codified in NYSE 

Rule 123D, as well as in NYSE Amex Equities Rule 

123D. 

10The Commission recently approved a proposed 

rule change by NYSE to, among other things, 

include ‘‘Rule 123D requirements for DMMs 

relating to openings, re-openings, delayed openings, 

trading halts, and tape indications’’ in its Minor 

Rule Violation Plan. See Securities Exchange Act 

Release No. 66758 (April 6, 2012), 77 FR 22032 

(April 12, 2012). 

11 In approving this proposed rule change, the 

Commission notes that it has considered the 

proposed rule’s impact on efficiency, competition, 

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

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

any violation of a rule of the Exchange, 

which violation the Exchange shall have 

determined is minor in nature.’’ 4 The 

provisions of Rule 476A are known as 

the Exchange’s Minor Rule Violation 

Plan. 

According to the Exchange, the 

‘‘summary fines’’ under Rule 476A 

provide a meaningful sanction for rule 

violations when the violation calls for 

stronger discipline than an admonition 

or cautionary letter, but the facts and 

circumstances of the violation do not 

warrant initiation of a formal 

disciplinary proceeding under Rule 476. 

A ‘‘List of Equities Rule Violations and 

Fines Applicable Thereto’’ (‘‘Rule 476A 

List’’) is appended as Part 1A of the 

Supplementary Material to the rule. 

In the instant proposal, NYSE Amex 

proposes to amend the Rule 476A List 

to: (i) Make technical, non-substantive 

changes to conform the list to 

previously-approved changes in 

Exchange rules, (ii) update the rules 

relating to conduct by Designated 

Market Makers (‘‘DMMs’’), and (iii) add 

rules relating to conduct by DMMs, as 

follows: 

Proposed Non-Substantive Changes to 

Rule 476A List 

The Exchange proposes to update the 

Rule 476A List by updating the title of 

a rule, updating references to rules that 

have been renumbered or harmonized 

with a Financial Industry Regulatory 

Authority (‘‘FINRA’’) rule, deleting 

references to rules that have been 

deleted, updating the descriptions of 

rules that have been amended, 

harmonizing the Rule 476A List with 

the list in the New York Stock Exchange 

(‘‘NYSE’’) Minor Rule Violation Plan, 

and fixing a typographical error.5

Proposed Updates to Rule 476A List for 

DMM Conduct Rules 

The current Rule 476A List includes 

certain rules that govern DMM conduct 

(e.g., NYSE Amex Equities Rules 

104(a)(1)(A) and 104.10). The Exchange 

proposes to update the Rule 476A List 

with current rules governing DMM 

conduct. In particular, under the 

proposed rule change, the list would be 

amended to include, more expansively, 

‘‘Rule 104—NYSE Amex Equities 

requirements for the dealings and 

responsibilities of DMMs,’’ as well as 

‘‘Rule 123D—NYSE Amex Equities 

requirements for DMMs relating to 

openings, re-openings, delayed 

openings, trading halts, and tape 

indications.’’ Thus, additional elements 

of Rule 104, as well as Rule 123D, 

would be included in the Minor Rule 

Violation Plan, as further detailed 

below. 

Rule 104 

NYSE Amex Equities Rule 104 

requires DMMs registered in one or 

more securities traded on the Exchange 

to engage in a course of dealings for 

their own account to assist in the 

maintenance of a fair and orderly 

market, insofar as reasonably 

practicable, by contributing liquidity 

when lack of price continuity and 

depth, or disparity between supply and 

demand exists or is reasonably to be 

anticipated.6

The Rule 476A List currently includes 

the following elements of Rule 104: 

• Rule 104(a)(1)(A), which requires DMMs 

to maintain a bid or an offer at the National 

Best Bid and National Best Offer (‘‘inside’’) 

at least 10% of the trading day for securities 

in which the DMM unit is registered that 

have a consolidated average daily volume of 

less than one million shares, and at least 5% 

for securities in which the DMM unit is 

registered that have a consolidated average 

daily volume equal to or greater than one 

million shares; and 

• Rule 104.10, which is described in the 

Rule 476A List as relating to ‘‘Functions of 

DMM.’’ Rule 104.10 refers to a former rule 

relating to certain subject matters that, 

according to the Exchange, continue to be 

covered in the current Rule 104. NYSE Amex 

currently does not have a Rule 104.10. 

The proposed rule change would, 

instead, include a single reference in the 

Rule 476A List identifying ‘‘Rule 104— 

NYSE Amex Equities requirements for 

the dealings and responsibilities of 

DMMs’’ as subject to the Minor Rule 

Violation Plan. The proposed rule 

change would have the effect of adding 

to the Rule 476A List Rules 104(b), (c), 

(d), and (e),7 as well as Rule 

104(a)(1)(B), the rule that governs the 

DMM’s new pricing obligations, which 

were implemented by all equities 

markets on December 6, 2010.8

Rule 123D 

The Exchange also proposes to 

include a reference to delayed openings, 

which is addressed in NYSE Amex 

Equities Rule 123D, in the Rule 476A 

List to harmonize the Rule 476A List 

with the list in the NYSE Minor Rule 

Violation Plan as existed at the time the 

Notice was filed with the Commission.9

Further, consistent with a recent NYSE 

filing, the Exchange proposes to expand 

the reference to Rule 123D to include 

other elements of that rule (e.g., 

openings, re-openings, trading halts, 

and tape indications) as being eligible 

under the Exchange’s Minor Rule 

Violation Plan.10 The effect of the 

change would be to include additional 

requirements of DMMs set forth in Rule 

123D—relating to openings, reopenings, trading halts, and tape 

indications—in the Minor Rule 

Violation Plan. 

III. Discussion and Commission 

Findings 

The Commission finds that the 

proposed rule change is consistent with 

the requirements of the Act and the 

rules and regulations thereunder 

applicable to a national securities 

exchange.11 In particular, the 

Commission believes that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act 12 because expanding 

the list of DMM obligations that are 

subject to the Minor Rule Violation Plan 

should afford the Exchange increased 

flexibility in carrying out its supervisory 

responsibilities, and, in doing so, help 

to meet the aim of protecting investors 

and the public interest. 

The Commission also believes that the 

proposed rule change is consistent with 

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23534 Federal Register / Vol. 77, No. 76 / Thursday, April 19, 2012 / Notices 

13 15 U.S.C. 78f(b)(1) and 15 U.S.C. 78f(b)(6). 

14The Commission believes that it is appropriate 

to include in NYSE Amex Rule 476A references to 

rules that are currently operating on a pilot basis. 

15The Commission also recognizes that the 

Exchange proposes to harmonize its Rule 476A List 

with the NYSE Minor Rule Violation Plan by 

adding violations not currently included in the Rule 

476A List. 

16See NYSE Amex Rule 476A(d). 

17 15 U.S.C. 78f(b)(7) and 15 U.S.C. 78f(d)(1). 

18 17 CFR 240.19d–1(c)(2). 

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

20 17 CFR 200.30–3(a)(12); 17 CFR 200.30– 

3(a)(44). 

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

2 17 CFR 240.19b–4. 

3 17 CFR 240.19b–4(f)(6). 

Sections 6(b)(1) and 6(b)(6) of the Act,13

which require that an exchange enforce 

compliance with, and have rules that 

provide appropriate discipline for 

violations of, the Act, the rules and 

regulations thereunder, and Exchange 

rules. As an initial matter, the proposed 

rule change will further these objectives 

through its clarification of the list of 

Exchange rule violations that are subject 

to NYSE Amex Rule 476A by updating 

rule titles and rule references, deleting 

references to rules that have been 

deleted, updating descriptions of rules 

that have been amended, and fixing a 

typographical error. 

Further, the Commission recognizes 

that the proposed rule change will 

render violations of DMM obligations 

under Rule 104 that were not previously 

on the Rule 476A List,14 as well as 

violations of DMM obligations under 

Rule 123D, as eligible for treatment as 

minor violations.15 However, the 

Commission notes that designating a 

rule as subject to the Minor Rule 

Violation Plan does not signify that 

violation of the rule will always be 

deemed a minor violation. As noted by 

the Exchange, Rule 476A preserves the 

Exchange’s discretion to seek formal 

discipline, as warranted, when 

transgressions of rules designated as 

eligible for the Minor Rule Violation 

Plan are found to be more serious. Thus, 

the Exchange will remain able to 

require, on a case-by-case basis, formal 

disciplinary action for any particular 

violation. Therefore, the Commission 

believes that the proposed rule change 

will not compromise the Exchange’s 

ability to seek more stringent sanctions 

for the more serious violations of Rules 

104 and 123D. 

In addition, because NYSE Amex Rule 

476A provides procedural rights to a 

person fined under the rule, entitling 

the person to contest the fine and 

receive a full disciplinary proceeding,16

the Commission believes that NYSE 

Amex Rule 476A, as amended by this 

proposed rule change, will provide a 

fair procedure for the disciplining of 

Exchange members and persons 

associated with members, consistent 

with Sections 6(b)(7) and 6(d)(1) of the 

Act.17

Finally, the Commission finds that the 

proposed rule change is consistent with 

the public interest, the protection of 

investors, or is otherwise in furtherance 

of the purposes of the Act, as required 

by Rule 19d–1(c)(2) under the Act,18

which governs minor rule violation 

plans. The Commission believes that the 

proposed changes to NYSE Amex Rule 

476A will strengthen the Exchange’s 

ability to carry out its oversight and 

enforcement responsibilities as a selfregulatory organization, in cases where 

full disciplinary proceedings are 

unsuitable in view of the nature of a 

particular violation. 

In approving this proposed rule 

change, the Commission emphasizes 

that in no way should the amendment 

of the rule be seen as minimizing the 

importance of compliance with 

Exchange rules and all other rules 

subject to the imposition of fines under 

NYSE Amex Rule 476A. The 

Commission believes that the violation 

of any self-regulatory organization’s 

rules, as well as Commission rules, is a 

serious matter. However, NYSE Amex 

Rule 476A provides a reasonable means 

of addressing rule violations that do not 

rise to the level of requiring formal 

disciplinary proceedings, while 

providing greater flexibility in handling 

certain violations. The Commission 

expects that the Exchange will continue 

to conduct surveillance with due 

diligence and make a determination 

based on its findings, on a case by-case 

basis, of whether a violation requires 

formal disciplinary action under NYSE 

Amex Rule 476. 

IV. Conclusion 

It is therefore ordered, pursuant to 

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

proposed rule change (SR–NYSEAmex– 

2012–10) be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–9408 Filed 4–18–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66810; File No. SR– 

NYSEArca–2012–30] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Amending NYSE Arca 

Equities Rule 7.31(h)(4) To Make 

Passive Liquidity Orders in ExchangeListed Securities Available to All 

Users, Regardless of Whether a Lead 

Market Maker Is Assigned to the 

Security 

April 13, 2012. 

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 April 3, 

2012, NYSE Arca, Inc. (the ‘‘Exchange’’ 

or ‘‘NYSE Arca’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Exchange 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 amend 

NYSE Arca Equities Rule 7.31(h)(4) to 

make Passive Liquidity Orders (‘‘PL 

Orders’’) in Exchange-listed securities 

available to all Users, regardless of 

whether a Lead Market Maker (‘‘LMM’’) 

is assigned to the security. The text of 

the proposed rule change is available at 

the Exchange, www.nyse.com, and the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

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

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