14176 Federal Register / Vol. 74, No. 59 / Monday, March 30, 2009 / Notices 

4 15 U.S.C. 78q–1. 

5Supra note 2. 

6Supra note 3. 

7 17 CFR 200.30–3(a)(12). 

1 15 USC. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3The Commission notes that NYSE Alternext US 

LLC recently changed its name to NYSE Amex LLC. 

See Securities Exchange Act Release No. 59575 

(March 13, 2009) (SR–NYSEALTR–2009–24). 

4 15 U.S.C. 78s(b)(3)(A). 

5 17 CFR 240.19b–4(f)(6). 

that MBSD and NSCC collect such fines. 

GSD members will continue to be 

entitled to contest fines pursuant to GSD 

Rule 37. 

2. Member Response to FICC Reports 

Prior to this rule change, GSD and 

MBSD members are required to report 

promptly to FICC any information 

contained in a FICC report that the 

member believes to be an error or 

discrepancy. However, GSD Rule 11, 

Section 12, and Rule 5, Section 5, place 

an additional requirement for members 

using GSD’s netting or comparison 

services to report the discrepancy no 

later than 10 calendar days after receipt 

of the report. A similar requirement is 

made with respect to MBSD members 

under MBSD Article V, Rule 4, Section 

3, which requires that the discrepancy 

be reported no later than 10 calendar 

days. NSCC’s rules require that 

discrepancies be reported by NSCC 

members promptly but do not reference 

a specific member of days. The 

proposed rule change conforms the GSD 

and MBSD rules to those of NSCC by 

deleting the specific reference to a 10- 

day requirement in favor of the general 

requirement that the member report the 

discrepancy promptly. 

In addition, FICC proposes to change 

the terminology regarding the 

definitions of ‘‘Foreign Affiliate,’’ 

‘‘Foreign Affiliate Trade,’’ ‘‘Foreign 

Netting Member,’’ and ‘‘Foreign Person’’ 

in GSD Rule 1 to incorporate the 

defined terms used in NSCC’s and The 

Depository Trust Company’s (also a 

FICC-affliliate) rules, by refering to 

‘‘Non-U.S.’’ or ‘‘Non-domestic’’ in place 

of ‘‘Foreign.’’ 

FICC believes that the proposed rule 

change is consistent with Section 17A of 

the Act 4 and the rules promulgated 

thereunder because it makes technical 

changes to clearing agency rules that 

conform with the obligations required of 

a common member. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

FICC does not believe that the 

proposed rule change will have any 

impact or impose any burden on 

competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

FICC has not solicited or received 

written comments relating to the 

proposed rule change. FICC will notify 

the Commission of any comments it 

receives. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(iii) of the Act 5 and Rule 

19b–4(f)(4) thereunder.6 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 

No. SR–FICC–2009–05 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC, 20549–1090. 

All submissions should refer to File No. 

SR–FICC–2009–05. 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 am and 3 pm. 

Copies of such filing also will be 

available for inspection and copying at 

FICC’s principal office and on FICC’s 

Web site at http://ficc.com/gov/ 

gov.docs.jsp?NS-query=#rf. 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 

submission should refer to File No. SR– 

FICC–2009–05 and should be submitted 

on or before April 20, 2009. 

For the Commission by the Division of 

Trading and Markets pursuant to delegated 

authority.7

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–6963 Filed 3–27–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59620; File No. SR– 

NYSEALTR–2009–29] 

Self-Regulatory Organizations; NYSE 

Alternext US LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change Extending the Operative 

Date of Rule 92(c)(3) From March 31, 

2009 to July 31, 2009 

March 23, 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 March 13, 

2009, NYSE Alternext US LLC3 (‘‘NYSE 

Alternext’’ 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 Exchange. The 

Exchange filed the proposed rule change 

pursuant to Section 19(b)(3)(A) of the 

Act 4 and Rule 19b–4(f)(6) thereunder,5

which renders the proposed rule change 

effective upon filing with the 

Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 


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Federal Register / Vol. 74, No. 59 / Monday, March 30, 2009 / Notices 14177 

6See SR–NYSE–2009–30 (formally submitted on 

March 13, 2009). 

7See Securities Exchange Act Release No. 58673 

(Sept. 29, 2008), 73 FR 57707 (Oct. 3, 2008) (SR– 

NYSE–2008–60 and SR–Amex 2008–62) (approving 

the Merger). 

8 15 U.S.C. 78f. 

9See Securities Exchange Act Release No. 58705 

(Oct. 1, 2008), 73 FR 58995 (Oct. 8, 2008) (SR– 

Amex–2008–63) (approving the Equities 

Relocation). 

10See Securities Exchange Act Release Nos. 

58705 (Oct. 1, 2008), 73 FR 58995 (Oct. 8, 2008) 

(SR–Amex–2008–63); No. 58833 (Oct. 22, 2008), 73 

FR 64642 (Oct. 30, 2008) (SR–NYSE–2008–106); No. 

58839 (Oct. 23, 2008), 73 FR 64645 (October 30, 

2008) (SR–NYSEALTR–2008–03); No. 59022 (Nov. 

26, 2008), 73 FR 73683 (Dec. 3, 2008) (SR– 

NYSEALTR–2008–10); and No. 59027 (Nov. 28, 

2008), 73 FR 73681 (Dec. 3, 2008) (SR–NYSEALTR– 

2008–11). 

11See Securities Exchange Act Release No. 56017 

(Jul. 5, 2007), 72 FR 38110 (Jul. 12, 2007) (SR– 

NYSE–2007–21). 

12See NASD Rule 2111 and IM–2110–2. 

13See Securities Exchange Act Release No. 56968 

(Dec. 14, 2007), 72 FR 72432 (Dec. 20, 2007) (SR– 

NYSE–2007–114). 

14See Securities Exchange Act Release No. 57682 

(Apr. 17, 2008), 73 FR 22193 (Apr. 24, 2008) (SR– 

NYSE–2008–29). 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to extend the 

operative date of Rule 92(c)(3) from 

March 31, 2009 to July 31, 2009. The 

text of the proposed rule change is 

available at NYSE Alternext, 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 

Exchange included statements 

concerning the purpose of, and basis for, 

the proposed rule change. The text of 

these 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 aspects 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 extend 

the delayed operative date of Rule 

92(c)(3) from March 31, 2009 to July 31, 

2009. The Exchange believes that this 

extension will provide the time 

necessary for the Exchange, the New 

York Stock Exchange LLC (‘‘NYSE’’), 

and the Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) to harmonize 

their respective rules concerning 

customer order protection to achieve a 

standardized industry practice.6

Merger Background 

As described more fully in a related 

rule filing,7 NYSE Euronext acquired 

The Amex Membership Corporation 

(‘‘AMC’’) pursuant to an Agreement and 

Plan of Merger, dated January 17, 2008 

(the ‘‘Merger’’). In connection with the 

Merger, the Exchange’s predecessor, the 

American Stock Exchange LLC 

(‘‘Amex’’), a subsidiary of AMC, became 

a subsidiary of NYSE Euronext and was 

renamed NYSE Alternext US LLC 

(‘‘NYSE Alternext’’ or the ‘‘Exchange’’), 

and continues to operate as a national 

securities exchange registered under 

Section 6 of the Securities Exchange Act 

of 1934, as amended (the ‘‘Act’’).8 The 

effective date of the Merger was October 

1, 2008. 

In connection with the Merger, on 

December 1, 2008, the Exchange 

relocated all equities trading conducted 

on the Exchange legacy trading systems 

and facilities located at 86 Trinity Place, 

New York, New York, to trading systems 

and facilities located at 11 Wall Street, 

New York, New York (the ‘‘Equities 

Relocation’’). The Exchange’s equity 

trading systems and facilities at 11 Wall 

Street (the ‘‘NYSE Alternext Trading 

Systems’’) are operated by the NYSE on 

behalf of the Exchange.9

As part of the Equities Relocation, 

NYSE Alternext adopted NYSE Rules 1– 

1004, subject to such changes as 

necessary to apply the Rules to the 

Exchange, as the NYSE Alternext 

Equities Rules to govern trading on the 

NYSE Alternext Trading Systems.10 The 

NYSE Alternext Equities Rules, which 

became operative on December 1, 2008, 

are substantially identical to the current 

NYSE Rules 1–1004 and the Exchange 

continues to update the NYSE Alternext 

Equities Rules as necessary to conform 

with rule changes to corresponding 

NYSE Rules filed by the NYSE. 

Rule 92 Background 

On July 5, 2007, the Commission 

approved amendments to NYSE Rule 92 

to permit riskless principal trading at 

the NYSE.11 These amendments were 

filed in part to begin the harmonization 

process between NYSE Rule 92 and 

FINRA’s Manning Rule.12 In connection 

with those amendments, the NYSE 

implemented for an operative date of 

January 16, 2008, NYSE Rule 92(c)(3), 

which permits NYSE member 

organizations to submit riskless 

principal orders to the NYSE, but 

requires them to submit to a designated 

NYSE database a report of the execution 

of the facilitated order. That rule also 

requires members to submit to that same 

database sufficient information to 

provide an electronic link of the 

execution of the facilitated order to all 

of the underlying orders. 

For purposes of NYSE Rule 92(c)(3), 

the NYSE informed member 

organizations that when executing 

riskless principal transactions, firms 

must submit order execution reports to 

the NYSE’s Front End Systemic Capture 

(‘‘FESC’’) database linking the execution 

of the riskless principal order on the 

NYSE to the specific underlying orders. 

The information provided must be 

sufficient for both member firms and the 

NYSE to reconstruct in a timesequenced manner all orders, including 

allocations to the underlying orders, 

with respect to which a member 

organization is claiming the riskless 

principal exception. 

Because the rule change required both 

the NYSE and member organizations to 

make certain changes to their trading 

and order management systems, the 

NYSE filed for immediate effectiveness 

to delay to May 14, 2008 the operative 

date of the NYSE Rule 92(c)(3) 

requirements, including submitting endof-day allocation reports for riskless 

principal transactions and using the 

riskless principal account type 

indicator.13 The NYSE filed for an 

additional extension of the operative 

date of Rule 92(c)(3) to March 31, 

2009.14 Because NYSE Alternext 

adopted NYSE Rule 92 in its then 

current form, the delayed operative date 

of March 31, 2009 for the NYSE Rule 

92(c)(3) reporting requirements also 

applies for NYSE Alternext Equities 

Rule 92(c)(3) reporting requirements. 

Request for Extension 

FINRA, NYSE, and the Exchange have 

been working diligently on fully 

harmonizing their respective rules, 

including reviewing the possibilities for 

a uniform reporting standard for riskless 

principal transactions. However, 

because of the complexity of the 

existing customer order protection rules, 

including the need for input from 

industry participants as well as 

Commission approval, the Exchange, 

NYSE, and FINRA will not have 

harmonized their respective customer 

order protection rules by March 31, 

2009. 

The Exchange notes that it has 

reached agreement with NYSE and 

FINRA on a harmonized approach to 

customer order protection rules. As 

authorized by their respective Boards, 

FINRA and NYSE Regulation, Inc. have 


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15See NYSE Regulation Information Memo 09–13 

(March 12, 2009); FINRA Regulatory Notice 09–15 

(March 12, 2009). 

16The Exchange notes that it would also need to 

make technological changes to implement the 

proposed FESC reporting solution for Rule 92(c)(3). 

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

18 15 U.S.C. 78f(b)(5). 

19 15 U.S.C. 78s(b)(3)(A). 

20 17 CFR 240.19b–4(f)(6). 

21 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule 

19b–4(f)(6)(iii) requires that a self-regulatory 

organization submit to the Commission written 

notice of its intent to file the proposed rule change, 

along with a brief description and text of 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 notice 

requirement. 

22 Id. 

23For the purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

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

each published a Notice to Members/ 

Information Memo that solicit 

comments from their respective member 

participants on the proposed 

harmonized approach to customer order 

protection.15 Because industry 

participants need to code their trading 

systems to comply with customer order 

protection rules, the Exchange believes 

that industry input is vital to ensuring 

that the approach to customer order 

protection both meets regulatory needs 

of protecting customer orders, but is 

also feasible technologically. 

The Exchange continues to believe 

that pending full harmonization of the 

respective customer order protection 

rules, it would be premature to require 

firms to meet the current Rule 92(c)(3) 

FESC reporting requirements.16 Indeed, 

having differing reporting standards for 

riskless principal orders would appear 

to defeat the overall goal of the 

harmonization process. 

Accordingly, to provide the Exchange, 

NYSE, and FINRA the time necessary to 

review their respective rules and 

develop a harmonized rule set that 

would apply across their respective 

marketplaces, the Exchange is proposing 

to delay the operative date for NYSE 

Alternext Equities Rule 92(c)(3) from 

March 31, 2009 to July 31, 2009. 

Pending the harmonization of the 

three rules, the Exchange will continue 

to require that, as of the date each 

member organization implements 

riskless principal routing, the member 

organization have in place systems and 

controls that allow them to easily match 

and tie riskless principal execution on 

the Exchange to the underlying orders 

and that they be able to provide this 

information to the Exchange upon 

request. To make clear that this 

requirement continues, the Exchange 

proposes to add supplementary material 

to Rule 92 that explains that the Rule 

92(c)(3) reporting requirements are 

suspended until July 31, 2009 and that 

member organizations are required to 

have in place such systems and controls 

relating to their riskless principal 

executions on the Exchange. Moreover, 

the Exchange will coordinate with 

NYSE and FINRA to examine for 

compliance with the rule requirements. 

2. Statutory Basis 

The Exchange believes that its 

proposed rule change is consistent with 

Section 6(b) of the Act,17 in general, and 

furthers the objectives of Section 6(b)(5) 

of the Act,18 in particular, insofar as it 

is designed to prevent fraudulent and 

manipulative acts and practices, 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 

Exchange believes the proposed 

extension provides the Exchange, NYSE, 

and FINRA the time necessary to 

develop a harmonized rule concerning 

customer order protection that will 

enable member organizations to 

participate in the national market 

system without unnecessary 

impediments. 

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: (i) 

Does not significantly affect the 

protection of investors or the public 

interest; (ii) does not impose any 

significant burden on competition; and 

(iii) does not 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, the proposed rule change has 

become effective pursuant to Section 

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

4(f)(6) thereunder.20

A proposed rule change filed under 

19b–4(f)(6) normally may not become 

operative prior to 30 days after the date 

of filing.21 However, Rule 19b– 

4(f)(6)(iii) 22 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. The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest 

because such waiver would allow the 

Exchange to extend the operative date of 

NYSE Alternext Equities Rule 92(c)(3) 

without interruption. For this reason, 

the Commission designates the 

proposed rule change to be operative 

upon filing with the Commission.23

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

the 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–NYSEALTR–2009–29 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–NYSEALTR–2009–29. 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 


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Federal Register / Vol. 74, No. 59 / Monday, March 30, 2009 / Notices 14179 

24 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(6). 

5See Securities Exchange Act Release No. 34– 

56017 (July 5, 2007), 72 FR 38110 (July 12, 2007), 

SR–NYSE–2007–21. 

6See NASD Rule 2111 and IM–2110–2. 

7See Securities Exchange Act Release No. 56968 

(Dec. 14, 2007), 72 FR 72432 (Dec. 20, 2007), SR– 

NYSE–2007–114. 

8See Securities Exchange Act Release No. 57682 

(April 17, 2008), 73 FR 22193 (April 24, 2008), SR– 

NYSE–2008–29. 

9NYSE Amex LLC has filed a companion rule 

filing to conform its Equities Rules to the changes 

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

29, formally submitted March 13, 2009). 

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, 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– 

NYSEALTR–2009–29 and should be 

submitted on or before April 20, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.24

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–6961 Filed 3–27–09; 8:45 am] 

BILLING CODE 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59621; File No. SR–NYSE– 

2009–30] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Extending the 

Operative Date of NYSE Rule 92(c)(3) 

From March 31, 2009 to July 31, 2009 

March 23, 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 March 13, 

2009, the 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 Exchange. The 

Exchange filed the proposed rule change 

pursuant to Section 19(b)(3)(A) of the 

Act 3 and Rule 19b–4(f)(6) thereunder,4

which renders the proposed rule change 

effective upon filing with the 

Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to extend the 

operative date of NYSE Rule 92(c)(3) 

from March 31, 2009 to July 31, 2009. 

The text of the proposed rule change is 

available at NYSE, 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 

Exchange included statements 

concerning the purpose of, and basis for, 

the proposed rule change. The text of 

these 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 aspects 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 extend 

the delayed operative date of NYSE Rule 

92(c)(3) from March 31, 2009 to July 31, 

2009. The Exchange believes that this 

extension will provide the time 

necessary for the Exchange and the 

Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) to harmonize 

their respective rules concerning 

customer order protection to achieve a 

standardized industry practice. 

Background 

On July 5, 2007, the Commission 

approved amendments to NYSE Rule 92 

to permit riskless principal trading at 

the Exchange.5 These amendments were 

filed in part to begin the harmonization 

process between Rule 92 and FINRA’s 

Manning Rule.6 In connection with 

those amendments, the Exchange 

implemented for an operative date of 

January 16, 2008, NYSE Rule 92(c)(3), 

which permits Exchange member 

organizations to submit riskless 

principal orders to the Exchange, but 

requires them to submit to a designated 

Exchange database a report of the 

execution of the facilitated order. That 

rule also requires members to submit to 

that same database sufficient 

information to provide an electronic 

link of the execution of the facilitated 

order to all of the underlying orders. 

For purposes of NYSE Rule 92(c)(3), 

the Exchange informed member 

organizations that when executing 

riskless principal transactions, firms 

must submit order execution reports to 

the Exchange’s Front End Systemic 

Capture (‘‘FESC’’) database linking the 

execution of the riskless principal order 

on the Exchange to the specific 

underlying orders. The information 

provided must be sufficient for both 

member firms and the Exchange to 

reconstruct in a time-sequenced manner 

all orders, including allocations to the 

underlying orders, with respect to 

which a member organization is 

claiming the riskless principal 

exception. 

Because the rule change required both 

the Exchange and member organizations 

to make certain changes to their trading 

and order management systems, the 

NYSE filed for immediate effectiveness 

to delay to May 14, 2008 the operative 

date of the NYSE Rule 92(c)(3) 

requirements, including submitting endof-day allocation reports for riskless 

principal transactions and using the 

riskless principal account type 

indicator.7 The Exchange filed for an 

additional extension of the operative 

date of Rule 92(c)(3) to March 31, 2009.8

Request for Extension 9

FINRA and the Exchange have been 

working diligently on fully harmonizing 

their respective rules, including 

reviewing the possibilities for a uniform 

reporting standard for riskless principal 

transactions. However, because of the 

complexity of the existing customer 

order protection rules, including the 

need for input from industry 

participants as well as Commission 

approval, the Exchange and FINRA will 

not have harmonized their respective 

customer order protection rules by 

March 31, 2009. 

The Exchange notes that it has 

reached agreement with FINRA on a 

harmonized approach to customer order 

protection rules. As authorized by their 

respective Boards, FINRA and NYSE 

Regulation, Inc. have each published a 


sroberts on PROD1PC70 with NOTICES