Federal Register / Vol. 74, No. 40 / Tuesday, March 3, 2009 / Notices 9323 

2 17 CFR 200.30–3(a)(71)(i). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See SR–NYSE Alternext–2009–14 (to be filed 

February 18, 2009). The Commission notes that the 

referenced filing was rejected because of a 

deficiency in the proposed rule text. 

5See Securities and Exchange Act Release No. 

57295 (February 8, 2008), 73 FR 8731 (February 14, 

2008) (SR–NYSE–2008–11). 

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/other.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to C2’s Form 1 filed with 

the Commission, and all written 

communications relating to the 

application 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. 

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 10–191 and should be 

submitted on or before April 17, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.2

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–4426 Filed 3–2–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59446; File No. SR–NYSE– 

2009–17] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by New York 

Stock Exchange LLC Eliminating the 

Ability To Enter Orders on the 

Exchange With the Settlement 

Instructions of ‘‘Cash’’, ‘‘Next Day’’ 

and ‘‘Seller’s Option’’ 

February 25, 2009. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that on February 

18, 2009, New York Stock Exchange 

LLC (‘‘NYSE’’ or ‘‘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 self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to eliminate 

the ability to enter orders on the 

Exchange with the settlement 

instructions of ‘‘cash’’, ‘‘next day’’ and 

‘‘seller’s option’’. 

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 

Through this filing the Exchange 

seeks to amend several Exchange rules 

to remove references to certain 

settlement instructions that are no 

longer compatible with the Exchange’s 

more electronic market. These include 

instructions to settle on ‘‘cash’’, ‘‘next 

day’’ or ‘‘seller’s option’’ basis. 

The Exchange notes that parallel 

changes are proposed to be made to the 

rules of the NYSE Alternext Exchange 

(formerly the American Stock 

Exchange).4

Background 

Currently, in addition to regular way 

settlement (i.e., settlement on the third 

business day following trade date), a 

customer may submit an order with 

settlement instructions for cash, next 

day or seller’s option. An order with 

cash settlement instructions requires 

delivery of the securities the same day 

as the transaction in contrast to a regular 

way transaction, where the seller is 

required to deliver the securities on the 

third business day. Next day settlement 

instructions require delivery of the 

securities on the first business day 

following the transaction. Orders that 

have settlement instructions of seller’s 

option affords the seller the right to 

deliver the security or bond at any time 

within a specified period, ranging from 

not less than two business days to not 

more than 180 days for stocks and not 

less than two business days and no 

more than sixty days for U.S. 

government securities. 

Cash, next day and seller’s option 

settlement instructions are remnants of 

a time when the Exchange functioned 

completely as a manual auction market. 

While each of these settlement 

instructions may be included on order 

types that are submitted electronically 

to the Exchange, orders containing any 

of those settlement instructions cannot 

be immediately and automatically 

executed but must bypass the Exchange 

matching/execution engine, Display 

Book, and are literally printed on paper 

at the trading post for manual 

processing on the Floor. 

Proposed Elimination of Cash, Next 

Day, Seller’s Option Settlement 

Instructions 

In the Exchange’s current more 

electronic market, orders received by 

Exchange systems that are marketable 

upon entry are eligible to be 

immediately and automatically 

executed. Order types and settlement 

instructions that require manual 

intervention pose significant 

impediments to the efficient functioning 

of the Exchange’s market. To this end 

the Exchange filed with the Commission 

to remove legacy orders that require 

manual processing. Specifically, on 

January 31, 2008, the Exchange filed 

with the Commission to amend NYSE 

Rule 13 to invalidate the use of the 

manual order types ‘‘Alternative 

Order—Either/Or Order’’, ‘‘Orders Good 

Until a Specified Time’’, ‘‘Scale Order’’ 

and ‘‘Switch Order—Contingent Order’’ 

and Rule 124’s order types ‘‘Limited 

Order, With or Without Sale’’ and 

‘‘Basis Price Order’’ as being 

incompatible with the more electronic 

Exchange market environment.5

The Exchange’s commitment to 

provide its market participants with the 

ability to have their orders executed in 

the most efficient manner necessitates 

the elimination of cash, next day and 

seller’s option as valid settlement 

instructions for orders submitted to the 

mstockstill on PROD1PC66 with NOTICES

9324 Federal Register / Vol. 74, No. 40 / Tuesday, March 3, 2009 / Notices 

6Trading Posts are the horseshoe shaped counters 

manned by DMMS and trading assistants on the 

Trading Floor of the NYSE where individual stocks 

are bought and sold. 

7The Exchange notes that on December 30th and 

31st of 2008 it executed an atypical amount of 

shares for orders submitted with cash, next day and 

seller’s option settlement instructions. Specifically, 

on December 30, 2008, 126,504 shares were 

executed on a cash settlement basis, 10,284,879 

shares for next day settlement and 10,000,000 

shares for seller’s option settlement. In addition, 

there were 8,110,228 shares executed for cash 

settlement on December 31, 2008. The Exchange 

believes that this level of activity is reflective of the 

economic events of 2008 and is unrelated to usual 

trading patterns for these settlement types. 

8The Exchange does not have the capability to 

accept these order types for U.S. Government 

securities. 

9 15 U.S.C. 78s(b). 

10 15 U.S.C. 78f(b)(5). 

11 15 U.S.C. 78s(b)(3)(A). 

12 17 CFR 240.19b–4(f)(6). 

13 17 CFR 240.19b–4(f)(6)(iii). 

14 Id. In addition, Rule 19b–4(f)(6)(iii) 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. 

Exchange. These instructions result in 

these orders printing to paper at the 

trading Post 6 when they are submitted 

electronically in Exchange systems. The 

DMM and the trading assistant must 

realize that the document printed was in 

fact an order thus causing delay in the 

execution of the order. The DMM is 

then responsible for the manual 

execution of the order. The manual 

intervention required of the DMM and 

trading assistant at the Post in the 

processing of these orders puts the 

orders at the very real risk of ‘‘missing 

the market’’ as a result of the current 

speed of order execution in the 

Exchange market. 

In addition, the inefficiency of these 

order types is made obvious by the fact 

that they are infrequently used by 

market participants. A review of the 

different types of orders received by the 

Exchange during the week of May 12, 

2008 through May 16, 2008 shows that 

there were on average 28 cash orders 

(with an average of 1,653 shares per 

day), 48 next day orders (average of 763 

shares per day) and 2 seller’s option 

orders (average of 2,839 shares per day) 

utilized by market participants each 

day. By comparison, for May 2008, the 

Exchange received an average of 92.2 

million orders a day. Even during the 

last five trading days of 2007, when the 

most cash, next day and seller’s option 

orders are received, the average per day 

submissions were 123 for cash (average 

of 896 shares per day), 199 for next day 

(average of 1,848 shares per day) and 10 

for seller’s option (average of 11,679 

shares per day).7

The Exchange now seeks to eliminate 

cash, next day and seller’s option as 

valid settlement instructions for orders 

submitted to the NYSE. The Exchange 

therefore proposes to delete the 

references to those settlement 

instructions from NYSE Rules 12 

(‘‘Business Day’’), 64 (Bonds, Rights and 

100-Share-Unit Stocks), 66 (U.S. 

Government Securities),8 123 (Records 

of Orders), 124 (Odd-Lot Orders), 130 

(Overnight Comparison of Exchange 

Transactions), 137 (Written Contracts), 

137A (Samples of Written Contracts), 

189 (Unit of Delivery), 235 (ExDividends, Ex-Rights), 236 (ExWarrants), 241 (Interest—Added to 

Contract Price), 257 (Deliveries After 

‘‘Ex’’ Date), 282 (Buy-In Procedures) and 

440G (Transactions in Stocks and 

Warrants for the Accounts of Members, 

Principal Executives and Member 

Organizations). In addition, the 

Exchange seeks to eliminate entirely 

Rules 73 (‘‘Seller’s Option’’), 177 

(Delivery Time—‘‘Cash’’ Contracts) and 

179 (‘‘Seller’s Option’’). In addition, the 

Exchange proposes to remove language 

in Rules 64 and 66 that provide for the 

possibility of using multiple settlement 

periods for bids and offers entered on 

the Exchange since, for all practical 

purposes, the Exchange will now only 

accept orders for regular way settlement. 

The Exchange also proposes to amend 

Rule 66 to add the provision that exists 

in Rule 64 to allow the Exchange, in its 

discretion, to provide for additional 

settlement periods. The Exchange is 

proposing this addition to bring the 

provisions of the two rules into 

harmony as they address similar 

procedures with respect to different 

types of securities admitted to dealings 

on the Exchange. The Exchange, 

however, recognizes that any additional 

settlement periods it proposes to add 

will be subject to the rule filing process 

under Section 19(b) of the Securities 

Exchange Act of 1934 (the ‘‘Act’’) [sic].9

The Exchange will commence 

implementation of the proposed 

elimination of the settlement 

instructions discussed herein on March 

13, 2009. The Exchange intends to 

progressively implement this 

elimination on a security by security 

basis as it gains experience with the 

implementation until it is operative in 

all securities traded on the Floor. During 

the implementation, the Exchange will 

identify on its Web site which securities 

will no longer be eligible for these 

settlement instructions. 

2. Statutory Basis 

The basis under the Securities 

Exchange Act of 1934 (the ‘‘Act’’) [sic] 

for this proposed rule change is the 

requirement under Section 6(b)(5) 10

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. The instant filing 

accomplishes these goals by rescinding 

legacy settlement instructions that place 

customers at risk of missing the market 

and possibly receiving inferior priced 

executions. 

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 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, if 

consistent with the protection of 

investors and the public interest, it has 

become effective pursuant to Section 

19(b)(3)(A) 11 of the Act and Rule 19b– 

4(f)(6) thereunder.12

A proposed rule change filed under 

Rule 19b–4(f)(6) normally does not 

become operative until 30 days after the 

date of filing.13 However, Rule 19b– 

4(f)(6)(iii) 14 permits the Commission to 

designate a shorter time if such action 

is consistent with the protection of 

investors and the public interest. The 

Exchange has requested that the 

Commission waive the 30-day operative 

delay so that the proposed rule change 

may become operative on March 13, 

2009. Specifically, the Exchange states 

that the proposal will rescind legacy 

settlement instructions that are not 

compatible with the Exchange’s 

electronic market. The Commission 

believes that allowing the proposed rule 

change to become operative on March 

13, 2009 is consistent with the 

mstockstill on PROD1PC66 with NOTICES

Federal Register / Vol. 74, No. 40 / Tuesday, March 3, 2009 / Notices 9325 

15For purposes only of waiving the 30-day 

operative delay of the proposal, the Commission 

has considered the proposed rule’s impact on 

efficiency, competition and capital formation. 15 

U.S.C. 78c(f). 

16 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4The Commission notes that while provided in 

Exhibit 5 to the filing, the text of the proposed rule 

change is not attached to this notice but is available 

at the Exchange, the Commission’s Public Reference 

Room, and at http://www.nyse.com. 

5For transactions executed on the Exchange’s 

electronic trading platform, NYSE Arca will report 

the trade directly to OPRA. 

protection of investors and the public 

interest, because it will enable the 

Exchange to implement pending 

technological enhancements that require 

the rescission of these settlement 

instructions. The Exchange expects 

these enhancements to make its order 

processing operations more efficient and 

thereby strengthen and advance the 

quality of the Exchange’s market. 

Accordingly, the Commission 

designates the proposed rule change to 

be operative on March 13, 2009.15

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–2009–17 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–2009–17. 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 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–NYSE–2009–17 and should 

be submitted on or before March 24, 

2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–4427 Filed 3–2–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59440; File No. SR– 

NYSEArca–2009–11] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change by 

NYSE Arca, Inc. Amending Rule 6.69— 

Reporting Duties 

February 24, 2009. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on February 

13, 2009, NYSE Arca, Inc. (‘‘NYSE 

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

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Exchange Rule 6.69—Reporting Duties. 

The text of the proposed rule change is 

attached as Exhibit 5.4 A copy of this 

filing is available on the Exchange’s 

Web site at http:www.nyse.com, at the 

Exchange’s principal office and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

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

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to revise the procedures for 

reporting open outcry trades that occur 

on the options trading floor. 

All option transactions that occur on 

the options trading floor must be 

immediately reported to the Exchange, 

in a form and manner prescribed by the 

Exchange, for dissemination to the 

Options Price Reporting Authority 

(‘‘OPRA’’).5 This requirement applies to 

all OTP Holders who are required to 

report trades either directly to OPRA or 

to another party who is responsible for 

reporting trades to OPRA. 

All option transactions have two 

parties to a trade, a buyer and a seller. 

Pursuant to Rule 6.69(b), the responsible 

party for reporting a transaction is the 

party that participates on the transaction 

as the seller. The Exchange now 

proposes to revise this rule so that 

whenever a Floor Broker is participating 

on one side of a transaction, they 

become the responsible party for 

reporting the trade, regardless of 

whether they are the buyer or seller. The 

Exchange is proposing this change in 

order to provide a more efficient 

mechanism for reporting transactions. 

All orders on the Exchange are 

required to be in an electronic format 

prior to representation on the trading 

mstockstill on PROD1PC66 with NOTICES