Federal Register / Vol. 74, No. 72 / Thursday, April 16, 2009 / Notices 17701 

13For purposes only of waiving the 30-day 

operative delay of this proposal, the Commission 

has considered the proposed rule’s impact on 

efficiency, competition, and capital formation. 15 

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

14 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. 59475 

(February 26, 2009), 74 FR 9830. 

4See Chapter V, Section 14 of the BOX Rules. 

5BOX may trade options contracts in one-cent 

increments in certain approved issues through July 

3, 2009, as part of the Penny Pilot Program. See 

Securities Exchange Act Release No. 59629 (March 

26, 2009), 74 FR 15021 (April 2, 2009) (SR–BX– 

2009–17). 

6The Commission has considered the proposed 

rule change’s impact on efficiency, competition and 

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

7 15 U.S.C. 78f. 

8 15 U.S.C. 78f(b)(5). 

9 15 U.S.C. 78s(b)(2). 

designates the proposal operative upon 

filing.13

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–NYSEAmex-2009–11 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 

Number SR–NYSEAmex-2009–11. 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, on official business days between 

the hours of 10 a.m. and 3 p.m. Copies 

of such filing also will be available for 

inspection and copying at the principal 

office of NYSE Amex. 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– 

NYSEAmex-2009–11 and should be 

submitted on or before May 7, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–8683 Filed 4–15–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59742; File No. SR–BX– 

2009–014] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Order 

Approving a Proposed Rule Change 

Relating to Zero Bid Orders on the 

Boston Options Exchange Facility 

April 9, 2009. 

On February 26, 2009, NASDAQ OMX 

BX, Inc. (‘‘Exchange’’) 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 

relating to zero bid orders on the Boston 

Options Exchange Facility. The 

proposed rule change was published for 

comment in the Federal Register on 

March 6, 2009.3 The Commission 

received no comments on the proposal. 

This order approves the proposal. 

The proposed rule change amends 

Chapter V, Section 14 of the Rules of the 

Boston Options Exchange Group, LLC 

(‘‘BOX’’) to clarify the treatment of 

Market Orders to sell and BOX–Top 

Orders to sell when the highest bid on 

BOX is zero in the options series for a 

particular order (‘‘Zero Bid Order’’). 

Currently, Section 14 states, in part, 

that: ‘‘[i]n the case where the lowest 

offer for any options contract is $.05, 

and an Options Participant enters a 

Market Order to sell that series, any 

such Market Order shall be considered 

a Limit Order to sell at a price of $.05.’’ 4

The Exchange is amending Section 14 

so that it will apply equally to Market 

Orders to sell and BOX–Top Orders to 

sell when the highest bid on BOX is 

zero in the options series. In this case 

such Zero Bid Orders will be considered 

Limit Orders to sell at a price, above 

zero, that is equal to the minimum 

trading increment applicable to that 

particular options series. 

Consequently, where the BOX market 

displays a zero bid and the options 

series is subject to the Penny Pilot 

Program,5 the Zero Bid Order will be 

considered a Limit Order to sell at a 

price of $.01. If the options series is not 

subject to the Penny Pilot Program, the 

Zero Bid Order will be considered a 

Limit Order to sell at a price of $.05 or 

$.10, depending upon the minimum 

trading increment for the specific 

options series of the Zero Bid Order. 

Further, if the resulting Limit Order 

would cause either a locked or crossed 

market, then the original Market Order 

or BOX–Top Order will be rejected by 

the Trading Host. 

After careful review, 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 6 and, in particular, 

the requirements of Section 6 of the 

Act.7 Specifically, the Commission finds 

that the proposal is consistent with 

Section 6(b)(5) of the Act,8 in that the 

proposal has been designed to promote 

just and equitable principles of trade, 

and to protect investors and the public 

interest. The Commission believes that 

the proposed rule change will provide 

greater clarification to market 

participants regarding the handling of 

Zero Bid Orders on BOX. In addition, 

the Commission believes that the 

proposal will benefit the public interest 

by preventing locked or crossed markets 

in situations where the Limit Order 

resulting from the Zero Bid Order would 

cause such a lock or cross. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,9 that the 

proposed rule change (SR–BX–2009– 

014) is approved. 

mstockstill on PROD1PC66 with NOTICES

17702 Federal Register / Vol. 74, No. 72 / Thursday, April 16, 2009 / Notices 

10 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 Rule 110 (Amended May 21, 1964 and 

July 16, 1964, effective August 3, 1964). 

5 15 U.S.C. 78k(a). 

6 15 U.S.C. 78k(a)(1)(A). 

7 15 U.S.C. 78c(a)(38). 

8See Securities Exchange Act Release No. 14718 

(May 1, 1978), 43 FR 19738 (May 8, 1978) (SR– 

NYSE–78–24). 

9 17 CFR 240.11a1–5. 

10This provision has since been changed to 

Section 11(a)(1)(I). 

11See Securities Exchange Act Release No. 17569, 

46 FR 14888 (March 3, 1981). 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–8737 Filed 4–15–09; 8:45 am] 

BILLING CODE 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59746; File No. SR–NYSE– 

2009–08] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change by 

New York Stock Exchange LLC 

Rescinding NYSE Rule 110 Which 

Establishes the Role of Competitive 

Traders and Exchange Rule 107A 

Which Establishes the Role of the 

Registered Competitive Market Makers 

April 10, 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 April 6, 

2009, New York Stock Exchange LLC 

(‘‘NYSE’’ 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 selfregulatory 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 rescind 

NYSE Rule 110 which establishes the 

role of Competitive Traders (‘‘CTs’’) and 

Exchange Rule 107A which establishes 

the role of the Registered Competitive 

Market Makers (‘‘RCMMs’’). The 

Exchange also proposes to make 

conforming amendments to NYSE Rules 

36, 98, 123, 111, 476A, 800, 900 and 

1600 to eliminate references to RCMMs 

and CTs. The text of the proposed rule 

change is available at the Exchange, the 

Commission’s Public Reference Room, 

and http://www.nyse.com. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

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

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to rescind 

NYSE Rule 110 which sets forth the role 

of CTs and NYSE Rule 107A which sets 

forth the role of RCMMs. With the 

rescission of NYSE Rule 110 and NYSE 

Rule 107A, CTs and RCMMs will no 

longer be recognized classes of Floor 

Traders on the NYSE Floor. 

The Exchange also proposes to make 

conforming amendments to NYSE Rules 

36, 98, 476A, 111, 800, 900 and 1600 to 

eliminate references to RCMMs and 

CTs. 

I. Background of CTs and RCMMs 

The rules establishing CTs and 

RCMMs were enacted to create classes 

of Floor Traders that would commit 

capital to trade in a manner that would 

provide additional liquidity, contribute 

to mitigating price fluctuations and 

enhance competition. CTs were the 

class of Floor Traders that the Exchange 

established first in 1964.4 CTs were 

Floor Traders registered with and 

approved by the Exchange to trade for 

an account for which the CT had an 

interest. 

Section 11(a) of the Securities and 

Exchange Act of 1934 (the ‘‘Act’’),5 as 

amended by the 1975 Amendments, 

makes it unlawful, in part, for Exchange 

members to effect any transaction on the 

Floor for their own accounts. Section 

11(a)(1)(A) stated that it would exempt 

from this general prohibition 

transactions made by a dealer acting in 

the capacity of a market maker (‘‘market 

maker exception’’).6 A market maker is 

defined in Section 3(a)(38) of the Act as 

‘‘any dealer who, with respect to a 

security, holds himself out (by entering 

quotations in an inter-dealer 

communications system or otherwise) as 

being willing to buy and sell such 

security for his own account on a 

regular or continuous basis.’’ 7

In order to maintain a class of trader 

that could be called in to add depth and 

liquidity to the markets in listed stocks, 

the Exchange established the RCMM 

class of Floor trader in 1978.8 RCMMs 

functioned as proprietary traders that 

serve as supplemental market makers on 

the Floor. Historically, RCMMs were 

called upon to narrow the spread 

between bids and offers, improve the 

depth of the market in a given security 

and enter a bid or offer on the side of 

the market when called upon to do so 

by a Floor official. In their capacity as 

dealers, RCMMs were expected to 

provide a degree of competition to the 

specialists on the NYSE. 

On February 24, 1981, the 

Commission adopted Rule 11a1–5 9 to 

exempt from the proprietary trading 

prohibition of Section 11(a)(1) certain 

transactions by RCMMs registered on 

the Exchange. The Commission 

determined that RCMMs had the 

potential to provide sufficient benefits 

to their markets to warrant an 

exemption from the statutory 

prohibition pursuant to Section 

11(a)(1)(H).10 Rule 11a1–5 set forth that 

‘‘any transaction by a New York Stock 

Exchange registered competitive market 

maker * * * effected in compliance 

with their respective governing rules 

shall be deemed to be of a kind which 

is consistent with the purposes of 

Section 11(a)(1) of the Act, the 

protection of investors, and the 

maintenance of fair and orderly 

markets.’’ 11

II. Functions and Obligations of the 

RCMMs and CTs 

CTs and RCMMs are classes of Floor 

traders that commit capital to trade in 

a manner that provides additional 

liquidity, contribute to mitigating price 

fluctuations and enhance competition. 

A member registered as an RCMM is 

permitted, with certain limitations, to 

act as both a Floor Broker and RCMM 

in the same trading session. However, 

an RCMM may not act as both Floor 

Broker and RCMM in the same security 

in the same trading session. 

As a Floor Broker, the RCMM 

executes orders as agent for his 

customers, including other Floor 

Brokers. In his capacity as a Floor 

Broker, the RCMM acts solely as agent 

for his customer and does not commit 

capital or initiate on-Floor orders, 

mstockstill on PROD1PC66 with NOTICES