10330 Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 

8 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. 

4NYSE Alternext US LLC has submitted a 

companion rule filing to conform Rules 48 and 

123C–NYSE Alternext Equities to the changes 

proposed in this filing. See SR–NYSEALTR–2009– 

15, formally submitted February 20, 2009. 

5See SEC Release No. 58743 (Oct. 7, 2008), 73 FR 

60742 (Oct. 14, 2008) (SR–NYSE–2008–102). 

6See NYSE Rule 48.10. 

7See NYSE Rule 48(b)(2)(A)(i). 

8See NYSE Rule 48(b)(2)(A)(ii). 

9See NYSE Rule 48(b)(2)(A)(iv). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–4960 Filed 3–9–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59489; File No. SR–NYSE– 

2009–18] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing of Proposed Rule Change, as 

Modified by Amendment No. 1, 

Amending Rule 123C To Provide the 

Exchange With the Ability To 

Temporarily Suspend Certain NYSE 

Requirements Relating to the Closing 

of Securities at the Exchange 

March 3, 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 

19, 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, II, and III below, which Items 

have been prepared by the selfregulatory organization. On March 2, 

2009, the Exchange filed Amendment 

No. 1. The Commission is publishing 

this notice to solicit comments on the 

proposed rule change, as amended, from 

interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Rule 123C to provide the Exchange with 

the ability to temporarily suspend 

certain NYSE requirements relating to 

the closing of securities at the Exchange. 

The text of the proposed rule change 

is available at http://www.nyse.com, 

NYSE, 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, 

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 is proposing to amend 

NYSE Rule 123C to provide the 

Exchange with the ability to temporarily 

suspend certain rule requirements at the 

close when extreme order imbalances 

may cause significant dislocation to the 

closing price. The amendments 

proposed for NYSE Rule 123C are 

similar in substance to recent 

amendments to Rule 48 that added an 

extreme market volatility condition at 

the close. With this rule filing, the 

Exchange proposes to delete those 

provisions from Rule 48 and add them 

in modified form to Rule 123C. The 

Exchange also proposes to amend Rule 

48(c)(2) to conform the rule to the actual 

practice of how the Exchange notifies 

the Commission staff when a Rule 48 

condition has been declared.4

Background 

On October 2, 2008, the Exchange 

filed for immediate effectiveness to 

amend NYSE Rule 48 to provide the 

Exchange with the ability to suspend 

certain rules at the close when 

extremely high market volatility could 

negatively affect the ability to ensure a 

fair and orderly close.5 The Exchange 

amended Rule 48 in order to respond 

swiftly to market conditions at that 

time. Those amendments are temporary 

and will end on March 27, 2009.6

In that filing, the Exchange amended 

Rule 48 to include the close of trading 

as a time when a qualified Exchange 

officer would be permitted to declare an 

extreme market volatility condition. In 

such event, the Exchange could 

temporarily suspend NYSE Rules 52 

(Hours of Operation) and 123C(1) and 

(2) (Market on the Close Policy and 

Expiration Policy), provided that certain 

requirements are met. 

To enable a qualified Exchange officer 

to declare a Rule 48 condition at the 

close, the Exchange amended Rule 48(c) 

to include that a qualified Exchange 

officer may consider the volatility 

during that day’s trading session and 

evidence of significant order imbalances 

across the market at the close for 

purposes of determining whether to 

declare an extreme market volatility 

condition at the close. Under amended 

Rule 48, an extreme market volatility 

condition at the close is a separate event 

and must be considered in light of the 

facts and circumstances leading to the 

close. A Rule 48 condition at the open 

of trading does not extend to the close; 

a qualified Exchange officer needs to 

make an independent determination to 

invoke Rule 48 at the close regardless of 

whether Rule 48 was invoked at the 

open. Such a Rule 48 condition at the 

close must be declared by a qualified 

Exchange officer before the scheduled 

close of trading. 

Once an extreme market volatility 

condition at the close has been declared 

Floor wide, under NYSE Rule 

48(b)(2)(A), the Exchange may 

temporarily suspend Rule 52 on a 

security-by-security basis so that 

interest can be solicited and entered 

into Exchange systems to offset an 

imbalance in a security that may be 

present after the scheduled close of 

trading. During an extreme market 

volatility condition, interest may be 

solicited—including interest that may 

not have been present prior to 4 p.m.— 

to offset any imbalance that may exist as 

of 4 p.m. (or earlier, in the case of an 

earlier scheduled close).7 If offsetting 

interest is received in response to such 

solicitation, rather than have the DMM 

represent such offsetting interest in the 

close pursuant to Rule 902, such interest 

could be entered by the DMM directly 

into Exchange systems on behalf of the 

member or member organization 

representing such interest. Because 

Exchange systems do not allow for the 

electronic entry of orders after 

4 p.m., such interest must be 

represented manually by a Floor broker 

in the closing auction process and 

entered into Exchange systems by the 

DMM by no later than 4:30 p.m.8 The 

entry of any orders after 4 p.m. pursuant 

to the rule must be under the 

supervision and approval of a Floor 

Governor.9

To ensure a complete audit trail, any 

offsetting interest entered after 4 p.m. 

during an extreme market volatility 

condition must also be entered into the 

Front End Systemic Capture database 

(‘‘FESC’’), as required by NYSE Rule 

Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 10331 

10See proposed Rule 123C(8)(c). 

11See proposed Rule 123C(8)(a). 

12See NYSE Rules 902(a)(ii)(B) and 903(d)(ii). 

13 Interest is solicited from off-Floor participants 

via NYSE Trader Update Messages, which is an 

NYSE product with over 2,000 subscribers that 

provides a wide range of up-to-the minute notices 

of particular interest to the professional trading 

community. NYSE Trader Updates provide 

messages both via e-mail and on an RSS 

subscription basis. 

123. Because such interest may not have 

been known until after 4 p.m., under 

NYSE Rule 48(b)(2)(A)(iii), a Floor 

broker may represent such offsetting 

interest after 4 p.m. without first 

entering the details of the order into 

FESC, as required by NYSE Rule 123, so 

long as such orders are entered into 

FESC on an ‘‘as of’’ basis immediately 

following execution of the order. 

During an extreme market volatility 

condition at the close, the Exchange also 

has the ability to temporarily suspend, 

on a security-by-security basis, the 

NYSE Rule 123C(1) and (2) 

requirements that MOC and LOC orders 

that are legitimate errors cannot be 

cancelled or reduced after 3:50 p.m. 

Under NYSE Rule 48(b)(2)(B), only an 

erroneous MOC or LOC that would 

cause significant closing price 

dislocation for a particular security 

could be considered for cancellation. In 

other words, an MOC or LOC order that 

is as a result of a legitimate error that 

would have no impact on the closing 

price could not take advantage of the 

proposed temporary suspension, even in 

an extreme market volatility condition. 

If it is determined that such an MOC/ 

LOC legitimate error would significantly 

dislocate the close, such order can be 

cancelled or reduced at any time up 

until that particular security has closed. 

To further ensure that the ability to 

cancel an MOC or LOC order after 3:50 

is not abused, under NYSE Rule 

48(b)(2)(B)(iii), such an order can be 

cancelled or reduced only with the 

supervision and approval of both an 

Executive Floor Governor and a 

qualified Exchange officer. In the event 

an Executive Floor Governor is not 

available, a Floor Governor’s approval 

must be obtained. 

Proposed Amendments to Rule 123C 

The Exchange believes that the 

temporary amendments to Rule 48 

provide the Exchange with invaluable 

tools to ensure a fair and orderly close 

during extreme situations. However, the 

Exchange does not believe that a Floorwide condition needs to be present in 

order to warrant the use of these tools. 

The Exchange therefore proposes to 

adopt the amendments to Rule 48 on a 

permanent basis by deleting those 

provisions from Rule 48 and moving 

them to NYSE Rule 123C. As part of the 

amendments to Rule 123C, the 

Exchange further proposes modifying 

the terms of the temporary suspensions 

by permitting the Exchange to invoke 

such relief on a security-by-security 

basis without first declaring a Floorwide extreme market volatility 

condition and codifying certain 

practices for the entry of orders after 4 

p.m. 

A. Relocating Temporary Suspensions 

to Rule 123C 

As noted above, the amendments to 

Rule 48 were adopted as an emergency 

measure to respond to the extreme 

market volatility that the markets 

experienced in September and October 

2008. Under current Rule 48, the 

Exchange must first declare a Floorwide extreme market volatility 

condition before it can consider, on a 

security-by-security basis, whether to 

temporarily suspend either Rule 52 or 

Rule 123C(1) or (2). Because the 

temporary suspensions are already 

granted on a security-by-security basis, 

the Exchange does not believe that going 

forward it needs to first declare a Floorwide event in order to provide relief on 

an individual security basis. Indeed, the 

need for declaring a Floor-wide extreme 

market volatility condition before 4 p.m. 

could hamper the ability of the 

Exchange to invoke the temporary 

suspensions when they are needed 

most. 

For example, during normal market 

conditions that would not otherwise 

warrant a Rule 48 condition at the close, 

Exchange systems may receive a large 

market order in a security at 3:59:59 

p.m. Such a large order entered so near 

to the close could cause the type of 

extreme imbalance that would merit a 

temporary suspension of Rule 52, yet 

such relief would be unavailable 

because overall market conditions did 

not require a Rule 48 condition. The 

Exchange therefore believes that the 

ability to temporarily suspend rules at 

the close should be part of Rule 123C, 

which governs the closing process at the 

Exchange, and be available on a 

security-by-security basis, even after 4 

p.m.10 The Exchange therefore proposes 

deleting the extreme market volatility at 

the close condition and returning Rule 

48 to a form substantively identical to 

its form prior to the October 2, 2008 

amendments to that rule. 

In deleting the provisions of Rule 48 

condition at the close and moving those 

temporary suspensions to Rule 123C, 

the Exchange proposes certain 

modifications to the application of the 

temporary suspensions. These 

modifications are designed to provide 

clarity of how this tool should be used. 

Namely, the ability to temporarily 

suspend NYSE rules at the close should 

be used sparingly and only in extreme 

situations. 

The Exchange therefore proposes to 

qualify that temporary suspensions 

under proposed Rule 123C(8) are 

intended to be used to prevent a closing 

price dislocation that may result from 

an order entered into Exchange systems, 

or represented to a DMM orally at or 

near the close, that may result in an 

extreme order imbalance at or near the 

close.11 In such case, as with Rule 48, 

the rules that may be suspended are 

Rules 52 (Hours of Operation) and Rules 

123C(1) and (2) (Market on the Close 

Policy and Expiration Policy). 

B. Temporary Suspension of Rule 52 

As with Rule 48, the Exchange 

proposes to provide for the ability to 

temporarily suspend Rule 52 for the sole 

purpose of allowing the entry of orders 

after 4 p.m. to offset an extreme order 

imbalance at the close. As proposed, the 

process replaces the more cumbersome 

Rule 902 process, whereby the DMM 

represents interest on behalf of a Floor 

broker in the close on a riskless basis 

and then enters a coupled order in 

Crossing Session I to liquidate the DMM 

position taken on behalf of the Floor 

broker.12

With respect to the temporary 

suspension of Rule 52, the Exchange 

proposes to adopt without change the 

language of Rule 48(b)(2)(A)(i) and (iii) 

(proposed as NYSE Rule 123C(8)(a)(1)(i) 

and (v)). These provisions concern, 

respectively, the purpose of soliciting 

orders after 4 p.m. and the use of the 

FESC system on an ‘‘as of’’ basis 

following execution of an order. 

The Exchange proposes to codify as 

NYSE Rule 123C(8)(a)(1)(ii) that when 

soliciting orders to offset an imbalance 

in a security that may exist after 4 p.m., 

such interest will be solicited from offFloor participants directly and via their 

Floor broker representatives.13 Such 

solicitation requests shall be transmitted 

electronically both off-Floor and onFloor and shall include, at a minimum, 

information about the security symbol, 

the imbalance amount and side, the last 

sale price, and an order acceptance cutoff time. 

As proposed, the order acceptance 

cut-off time included in the solicitation 

request would be a time period 

designated by the Exchange. Because 

the goal is to close NYSE-listed 

securities as close to the closing bell as 

possible, such time period will 

10332 Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 

14The Exchange notes that all MOC and 

marketable LOC orders entered before 4 p.m. that 

otherwise would have participated in the close will 

continue to participate in the close. Because the 

MOC/LOC imbalance dictates the closing price (see 

Rule 123C(3)), any additional interest solicited after 

4 p.m. under proposed Rule 123C(8)(a)(1) is simply 

to ensure that the existing imbalance of MOC and 

marketable LOC orders can be filled at a price that 

does not cause a significant price dislocation from 

the last sale price. 

15See SEC Release No. 58845 (Oct. 24, 2008), 73 

FR 64379 (Oct. 29, 2008) (SR–NYSE–2008–46). 

generally be no longer than five 

minutes. As in Rule 48(b)(2)(A)(ii), in no 

event shall the order acceptance cut-off 

time be later than 4:30 p.m. (or 30 

minutes after the scheduled close in the 

case of an earlier scheduled close). The 

Exchange includes this 4:30 p.m. time 

period as an outside limit and it is not 

intended to provide a 30-minute 

window within which to receive 

offsetting interest, or that the Exchange 

seeks to close securities at 4:30 p.m. 

Rather, as proposed, if a solicitation 

request is transmitted at 4:02 p.m., the 

Exchange generally would include an 

order acceptance cut-off time of five 

minutes, requiring all offsetting interest 

to be received by 4:07 p.m. so that the 

DMM can close the security on or about 

4:07 p.m. In the rare circumstance that 

a solicitation request is not transmitted 

until 4:27 p.m., the order acceptance 

cut-off time would be 4:30 p.m., and not 

a five-minute period. The 4:30 p.m. end 

time is therefore included to ensure that 

this proposed temporary suspension of 

Rule 52 would not be used to extend the 

close indefinitely. 

The Exchange also proposes adding 

conditions on the type of order that may 

be entered in response to such a 

solicitation request. As proposed in 

Rule 123C(8)(a)(1)(iii), any offsetting 

interest received in response to a 

solicitation request must be a limit order 

priced no worse than the last sale and 

irrevocable. Therefore, if there is a buy 

imbalance, the offsetting interest must 

be sell orders priced no lower than the 

last sale price, or if there is a sell 

imbalance, the offsetting interest must 

be buy orders priced no higher than the 

last sale price. The Exchange believes 

that these conditions are necessary to 

ensure that the offsetting interest 

received is simply that: Interest that is 

intended to offset the existing imbalance 

to ensure that the closing price is not 

too far dislocated from the last sale. The 

Exchange does not believe that this 

process should be used to re-open the 

auction market or to permit the 

imbalance to swing in the opposite 

direction. 

The Exchange also proposes to add to 

the rule certain parameters regarding the 

timing of the closing of a security when 

such offsetting interest is solicited. As 

proposed in Rule 123C(8)(a)(1)(iv), in 

such circumstances, the DMM should 

close the security the earlier of the order 

acceptance cut-off time or if the 

imbalance is paired off at or reasonably 

contiguous to the last sale price. The 

Exchange believes that this provision 

will enable the DMM to arrange for a 

fair and orderly close that is as close to 

4 p.m. as possible. For example, if the 

Exchange receives a limited response to 

the solicitation request, the DMM would 

have up to the order acceptance cut-off 

time for orders to be entered. If, 

however, the DMM receives sufficient 

interest before the order acceptance cutoff time to close the security either at 

the last sale price, or at a reasonably 

contiguous price to the last sale price, 

the DMM could close the security 

earlier. As proposed, a reasonably 

contiguous price refers to a price point 

that is within cents of the last sale price, 

and would be a price point that during 

a regular closing auction would not be 

considered a dislocating closing price as 

compared to the last sale price. As 

discussed in more detail below in 

subsection D, such closings would be 

subject to approval of either an 

Executive Floor Governor or qualified 

NYSE Euronext staff employee and 

supervision of a qualified Exchange 

Officer, as defined in Rule 48(d). 

The Exchange believes that the 

parameters on when to close the 

security are necessary to ensure that 

securities trading at the Exchange close 

as near to 4 p.m. as possible, 

notwithstanding the fact that the 

Exchange seeks additional offsetting 

interest after 4 p.m. In either case, the 

Exchange proposes that any offsetting 

interest entered after 4 p.m., but before 

the DMM closes the security, would 

trade on parity.14 As discussed in 

greater detail in the Exchange’s proposal 

to adopt the Next Generation Market 

Model,15 under the Exchange’s parity 

model, Exchange systems will divide 

the size of the executing order by the 

number of participants. The DMM and 

each Floor broker are each considered a 

single participant. A Floor broker that 

represents multiple orders gets parity 

for the aggregate of orders. With parity, 

the total number of shares to be 

allocated to each participant will be 

distributed equally among the 

participants where possible and 

executions will be allocated in roundlots. In the event the number of shares 

to be executed at the price point is 

insufficient to allocate round lots to all 

the participants eligible to receive an 

execution at the price point, the 

Exchange systems will create an 

allocation wheel of the eligible 

participants at the price point and the 

available shares will be distributed to 

the participants in turn. If the DMM 

closes the security before the order 

acceptance cut-off time, any interest 

received before closing the security 

would trade on parity with other 

interest, including the DMM’s interest at 

the close. 

The Exchange also proposes to 

maintain, as in Rule 48(b)(2)(A)(ii), that 

any offsetting interest must be 

represented by a Floor broker. As noted 

in the Exchange’s filing to amend Rule 

48, Exchange systems do not have the 

capability to receive electronic interest 

after 4 p.m. As with any technology, it 

would be possible to reconfigure 

Exchange systems to accept orders 

electronically after 4 p.m. However, 

such technology changes would be 

costly and would divert resources away 

from other necessary technology 

changes that are already scheduled. 

Therefore, even if the Exchange could 

make such technology changes, they 

likely could not be implemented until 

mid to late 2009, and at great cost. 

The benefit, however, to 

implementing such a technology change 

would be limited. The temporary 

suspension of Rule 52 to attract 

offsetting interest is intended to be used 

for extreme, and likely rare 

circumstances where there exists such a 

large imbalance at the close that the 

DMM could not close the security 

without significantly dislocating the 

price of the security. For example, since 

October 2, 2008, when the Exchange 

adopted the amendments to Rule 48, the 

Exchange has invoked Rule 48 at the 

close eight times. However, because the 

DMM does not know what the actual 

imbalance will be until 4 p.m., the 

Exchange has solicited offsetting 

interest for only one security on one 

such trading day pursuant to these 

procedures. The Exchange notes that 

this has been a period of historic market 

volatility; the Exchange therefore 

expects that in times of calmer markets, 

the relief requested would be used in 

even rarer circumstances. 

The Exchange further notes that 

requiring Floor brokers to represent 

such offsetting interest does not unfairly 

discriminate against any market 

participants. The requirement to use a 

Floor broker, who would be acting only 

as an agent, does not deny anyone 

access to trading at the Exchange. It 

simply requires an agent as 

intermediary. Indeed, during the 

inherently manual process of closing a 

security, using a Floor broker to 

represent offsetting interest will provide 

customers with the most up-to-date 

Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 10333 

16 15 U.S.C. 78f(b)(5). 

information about the closing process in 

such a scenario. 

Moreover, the imbalance that would 

warrant such a temporary suspension 

would likely be of such a size that the 

type of customers that would be able to 

meaningfully and timely respond to 

such a solicitation request are 

sophisticated market participants who 

likely already have, or could easily 

arrange for, a relationship with a Floor 

broker to represent orders on their 

behalf. Such sophisticated participants 

have the wherewithal to enter into 

arrangements with Floor brokers that are 

financially competitive with entering 

orders directly into Exchange systems, 

e.g., via reduced commissions or pass 

through of Floor broker rebates. 

The Exchange therefore believes that 

the time and cost that would be 

necessary to reconfigure Exchange 

systems to electronically accept orders 

after 4 p.m. for this limited purpose far 

outweighs any benefit that may accrue 

from such technology changes. In any 

event, the Exchange believes that more 

information is necessary before the 

Exchange undertakes to implement any 

such technology change. The Exchange 

therefore proposes that six months after 

the approval of this proposed rule 

change, the Exchange will provide the 

Commission with information regarding 

how many times a Rule 52 temporary 

suspension under proposed Rule 

123C(8)(a)(1) has been invoked. At that 

time, both the Exchange and the 

Commission can make a more informed 

decision of whether the benefit in 

accepting orders electronically after 4 

p.m. outweighs the costs associated 

with making such changes. To provide 

both the Exchange and the Commission 

with time to evaluate the proposed rule, 

the Exchange proposes that Rule 

123C(8)(a)(1) be approved on a Pilot 

basis to end six months after the 

approval date of this filing. 

C. Temporary Suspension of Rule 

123C(1) and (2) 

The Exchange proposes to adopt 

permanently the provisions of Rule 

48(b)(2)(B) as proposed Rule 

123C(8)(a)(2), without any change. 

Therefore, as with Rule 48, the 

Exchange would have the ability to 

temporarily suspend, on a security-bysecurity basis, the NYSE Rule 123C(1) 

and (2) requirements that MOC and LOC 

orders that are legitimate errors cannot 

be cancelled or reduced after 3:50 p.m. 

The same conditions that were adopted 

as part of Rule 48 would apply here as 

well, i.e., that only an erroneous MOC 

or LOC that would cause significant 

closing price dislocation for a particular 

security could be considered for 

cancellation and that if it is determined 

that such an MOC/LOC legitimate error 

would dislocate the close, such order 

can be cancelled or reduced at any time 

up until that particular security has 

closed. As discussed below, the 

Exchange proposes to move Rule 

48(b)(2)(B)(iii) to proposed Rule 

123C(8)(b). 

D. Parameters for Obtaining Temporary 

Rule Suspensions 

The Exchange further proposes 

codifying the practices concerning how 

a temporary suspension under proposed 

Rule 123C(8)(a) would be invoked and 

who should be involved. As proposed in 

Rule 123C(8)(b), only the DMM assigned 

to a particular security may request a 

temporary suspension under proposed 

section 8(a) of the Rule. The Exchange 

believes that because the DMM is 

responsible for facilitating the close of 

trading of securities registered to that 

DMM, including supplying liquidity if 

needed, the DMM is in the unique 

position to know whether he or she 

would need additional interest to ensure 

a fair or orderly close. 

To ensure that such temporary 

suspensions are not invoked 

indiscriminately, the Exchange further 

proposes that any such determination, 

as well as any entry or cancellation of 

orders or closing of a security under 

proposed Rule 123C(8)(a), must be 

approved by either an Executive Floor 

Governor or a qualified NYSE Euronext 

employee, as defined in NYSE Rule 

46(b)(v). The Exchange also proposes 

requiring that any temporary 

suspensions under proposed NYSE Rule 

123C(8)(a) should be under the 

supervision of a qualified Exchange 

Officer, as defined in NYSE Rule 48(d). 

These requirements are identical to 

the requirement under Rule 

48(b)(2)(B)(iii), but more stringent than 

the current requirement under Rule 

48(b)(2)(A)(iv), which requires only the 

supervision of a Floor Governor. The 

Exchange believes that these heightened 

approval and supervision requirements 

will ensure that, as contemplated by the 

proposed rule, only extreme situations 

such as when a late-arriving order 

would cause significant price 

dislocation at the close would result in 

a temporary suspension of Exchange 

rules at the close. To assist the DMM 

and officials, proposed Rule 123C(8)(b) 

identifies a number of factors that may 

be considered when making such a 

determination. Such factors include, but 

are not limited to, when the order(s) that 

impacted the imbalance were entered 

into Exchange systems or orally 

represented to the DMM, the impact of 

such order(s) on the closing price of the 

security, the volatility of the security 

during the trading session, and the 

ability of the DMM to commit capital to 

dampen the price dislocation. 

Proposed Amendment to Rule 48(c)(2) 

In addition to the above-described 

amendments, the Exchange also 

proposes to amend Rule 48(c)(2), which 

concerns the method by which the 

Exchange notifies Commission staff 

when it declares a Rule 48 extreme 

market volatility condition. 

The current rule provides that the 

qualified Exchange officer will make a 

reasonable effort to consult with 

Commission staff before declaring an 

extreme market volatility condition and 

granting a suspension of the NYSE rules 

or procedures. In the event that the 

qualified Exchange officer cannot reach 

the Commission staff, the qualified 

Exchange officer will, as promptly as 

practicable in the circumstances, inform 

the Commission staff of such 

declaration. 

Given the limited relief that can be 

granted during a Rule 48 condition— 

certain Floor Official approvals are 

suspended and mandatory indications 

can be suspended—the Exchange 

believes that the requirement to consult 

with Commission staff before declaring 

an extreme market volatility condition 

imposes an undue burden on regulatory 

resources. Accordingly, the Exchange 

proposes to amend Rule 48(c)(2) to 

delete the requirement that the qualified 

Exchange officer undertake reasonable 

efforts to consult with Commission staff 

before declaring an extreme market 

volatility condition. As required by the 

rule, the Exchange will continue to 

inform the Commission staff, as 

promptly as practicable under the 

circumstances, when it has declared a 

Rule 48 extreme market volatility 

condition. 

2. Statutory Basis 

The basis under the Act for this 

proposed rule change is the requirement 

under Section 6(b)(5) 16 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 

noted above, the proposed rule is 

intended to be used in extreme 

circumstances when a large order 

imbalance or order entered in error 

could cause a closing price to be far 

dislocated from the last sale price. The 

rule is therefore intended to protect 

10334 Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices 

17 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. 

investors and the public interest to 

ensure that the closing price at the 

Exchange is not significantly dislocated 

from the last sale price by virtue of an 

extreme order imbalance at or near the 

close. 

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 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding, or 

(ii) as to which NYSE consents, the 

Commission will: 

(A) By order approve such proposed 

rule change; or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be 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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–NYSE–2009–18 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–2009–18. 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 offices 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–2009–18 and should 

be submitted on or before March 31, 

2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–4964 Filed 3–9–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59488; File No. SR– 

NYSEALTR–2009–15] 

Self-Regulatory Organizations; NYSE 

Alternext US LLC; Notice of Filing of 

Proposed Rule Change, as Modified by 

Amendment No. 1, Amending Rule 

123C To Provide the Exchange With 

the Ability To Temporarily Suspend 

Certain Exchange Requirements 

Relating to the Closing of Securities at 

the Exchange 

March 3, 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 

20, 2009, NYSE Alternext US LLC 

(‘‘Exchange’’ or ‘‘NYSE Alternext’’) 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 selfregulatory organization. On March 2, 

2009, the Exchange filed Amendment 

No. 1 to the proposed rule change. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change, as amended, from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Rule 123C to provide the Exchange with 

the ability to temporarily suspend 

certain Exchange requirements relating 

to the closing of securities at the 

Exchange. 

The text of the proposed rule change 

is available at http://www.nyse.com, the 

Exchange, 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, 

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 is proposing to amend 

Rule 123C—NYSE Alternext Equities to 

provide the Exchange with the ability to 

temporarily suspend certain rule 

requirements at the close when extreme 

order imbalances may cause significant 

dislocation to the closing price. The 

amendments proposed for Rule 123C— 

NYSE Alternext Equities are similar in 

substance [to] current Rule 48 extreme 

market volatility condition at the close 

provisions. With this rule filing, the 

Exchange proposes to delete those 

provisions from Rule 48 and add them 

in modified form to Rule 123C. The 

Exchange also proposes to amend Rule 

48(c)(2) to conform the rule to the actual