51678 Federal Register / Vol. 73, No. 172 / Thursday, September 4, 2008 / Notices 

14 15 U.S.C. 78s(b)(3)(A). 

15 17 CFR 240.19b–4(f)(6). 

16 17 CFR 240.19b–4(f)(6). 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. NYSE has complied with this 

requirement. 

17 Id. 

18For 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). 

19 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

mechanisms of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest. 

B.Self-Regulatory Organization’s 

Statement on Burden on Competition 

NYSE 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 foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 14 and Rule 19b–

4(f)(6) thereunder.15

A proposed rule change filed under 

19b–4(f)(6) normally may not become 

operative prior to 30 days after the date 

of filing.16 However, Rule 19b–

4(f)(6)(iii) 17 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 proposal may become 

operative immediately upon filing. The 

Commission believes that waiving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest. The Commission hereby 

grants the Exchange’s request and 

designates the proposal as operative 

upon filing.18

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–NYSE–2008–71 on the subject 

line. 

Paper Comments 

Send paper comments in triplicate to 

Secretary, Securities and Exchange 

Commission, Station Place, 100 F Street, 

NE., Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSE–2008–71. 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. 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–2008–71 and 

should be submitted on or before 

September 25, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–20465 Filed 9–3–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58430; File No. SR–NYSE–

2008–76] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change by 

New York Stock Exchange LLC 

Amending NYSE Rule 2B in Order To 

Establish Procedures Designed To 

Manage Potential Informational 

Advantages Resulting From the 

Affiliation Between the Exchange and 

Archipelago Securities L.L.C. 

August 27, 2008. 

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 August 

20, 2008, New York Stock Exchange 

LLC (‘‘NYSE’’ or the ‘‘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. 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 2B in order to establish 

procedures designed to manage 

potential informational advantages 

resulting from the affiliation between 

the Exchange and Archipelago 

Securities L.L.C., an NYSE affiliated 

member. 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, 


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Federal Register / Vol. 73, No. 172 / Thursday, September 4, 2008 / Notices 51679 

3See Securities Exchange Act Release No. 57377 

(Feb. 25, 2008), 73 FR 11177 (February 29, 2008) 

(SR–NYSEArca–2008–19). 

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

5 17 CFR 240.19b–4. 

6See Securities Exchange Act Release No. 57648 

(Apr. 11, 2008), 73 FR 20981 (April 17, 2008) (SR–

NYSEArca–2008–19) (order abrogating NYSE Arca 

Rule 7.31(x)). 

7 Id. 

8See NYSE Arca Equities Rule 7.31(x). 

9NYSE Arca’s proposed PO Plus functionality is 

substantially similar to the ‘‘Directed Order’’ type 

currently offered by The NASDAQ Stock Market 

LLC (‘‘Nasdaq’’), which allows Nasdaq members to 

enter orders to be routed to a user-designated 

market center other than Nasdaq, without first 

interacting with the Nasdaq order book. See 

Securities Exchange Act Release No. 55405 (March 

6, 2007), 72 FR 11069 (March 12, 2007) (SR–

NASDAQ–2007–020). 

10Following the ArcaEx-PCX merger, Archipelago 

merged with the NYSE and the PCX was later 

renamed NYSE Arca. 

11See Securities Exchange Act Release No. 52497 

(September 22, 2005), 70 FR 56949 (September 29, 

2005) (order approving SR–PCX–2005–90). The 

Commission’s approval was subject to several 

conditions and undertakings, specifically that: (1) 

Arca Securities would continue to operate and be 

regulated as a facility of the PCX; (2) the scope of 

the exception would be limited to outbound 

routing; (3) the primary regulatory responsibility for 

Arca Securities would lie with an unaffiliated SRO; 

and (4) the continued use of Arca Securities for 

outbound routing would remain optional for other 

PCX members. 

12 Id. 

13For purposes of inbound orders in general and 

NYSE Arca’s proposed amendment in particular, 

the Exchange believes that there is no functional 

difference between inbound orders routed by Arca 

Securities that previously scrape the NYSE Arca 

book and the PO Order, which do not. Each type 

of order is subject to the same principles governing 

NYSE Arca’s authority to send, and the Exchange’s 

authority to receive, orders routed via Arca 

Securities. As clarified herein, appropriate 

procedures are in place to manage any potential 

conflicts of interest or potential information 

advantages. 

14See Securities Exchange Act Release No. 55590 

(April 5, 2007), 72 FR 18707 (April 13, 2007) (notice 

of immediate effectiveness of SR–NYSE–2007–29). 

15See NYSE Rule 17(b)(1). 

16 Id. 

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 

On February 13, 2008, NYSE Arca Inc. 

(‘‘NYSE Arca’’) filed with the 

Commission a proposed rule change to 

amend NYSE Arca Rule 7.31(x) (the ‘‘PO 

Plus Proposal’’).3 NYSE Arca filed that 

rule change as a ‘‘non-controversial’’

proposed rule change pursuant to 

Section 19(b)(3)(A) 4 of the Act and Rule 

19b–4(f)(6) 5 thereunder, which 

rendered it effective upon filing with 

the Commission. On April 11, 2008, the 

Commission issued an order abrogating 

NYSE Arca’s PO Plus Proposal (the 

‘‘Abrogation Order’’).6

In the Abrogation Order, the 

Commission noted its concern regarding 

(i) the potential for conflicts of interest 

in instances where a member firm is 

affiliated with an exchange to which it 

is routing orders and (ii) the potential 

for informational advantages that could 

place an affiliated member of an 

exchange at a competitive advantage 

vis-a`-vis other non-affiliated members.7

The Exchange is submitting this 

proposed rule change in order to 

address the Commission’s concerns and 

clarify the Exchange’s procedures 

regarding affiliated members. 

a. NYSE Arca’s Proposed PO Plus Order 

According to its recent rule filing, 

NYSE Arca proposes to amend its 

Primary Only (‘‘PO’’) Order. The PO 

Order is a market or limit order that is 

routed to the primary, listing market, 

without sweeping the NYSE Arca book.8

NYSE Arca Users submit the PO Order 

to NYSE Arca. In turn, NYSE Arca 

passes the PO Order to Archipelago 

Securities L.L.C. (‘‘Arca Securities’’), its 

outbound order routing facility. Arca 

Securities routes the PO Order to the 

primary, listing market. PO Orders are 

thus a form of directed order, an order 

type that is commonly offered by 

exchanges and other market centers to 

enable firms to discharge their 

obligations under Regulation NMS and 

other rules.9 According to its filing, 

NYSE Arca intends to offer this order 

type, modified as PO Plus, for entry and 

execution throughout the trading day. 

Of course, by its definition, PO Orders 

may be routed by Arca Securities (upon 

instruction from NYSE Arca) to the 

NYSE in those instances where the 

NYSE is the primary, listing exchange. 

b. Order Routing and Existing NYSE 

Rules 

NYSE Rule 2B provides, in pertinent 

part, that: 

Without prior SEC approval, the Exchange 

or any entity with which it is affiliated shall 

not, directly or indirectly, acquire or 

maintain an ownership interest in a member 

organization. (Emphasis added.) 

Arca Securities is the approved 

outbound routing facility of NYSE Arca. 

In its Order approving the merger of the 

Archipelago Exchange (‘‘ArcaEx’’) with 

the Pacific Exchange (the ‘‘PCX’’),10 the 

Commission permitted ArcaEx’s holding 

company, Archipelago Holdings, Inc. 

(‘‘Archipelago’’), to own and operate 

Arca Securities, in its capacity as a 

facility of the PCX that routes orders 

from ArcaEx to other market centers.11

This approval remains in effect insofar 

as Arca Securities acts in the capacity of 

a facility of NYSE Arca for the routing 

of orders from NYSE Arca to other 

market centers, including the NYSE, 

subject to the applicable conditions.12

Although Arca Securities was required 

to discontinue its operation of the DOT 

function in connection with the 

Archipelago/NYSE merger, no 

restrictions other than those previously 

described were requested or imposed by 

the Commission with respect to Arca 

Securities’ continuing role as an 

outbound router for NYSE Arca.13

Arca Securities performs a similar 

outbound routing function on behalf of 

the NYSE. On April 5, 2007, in a notice 

of immediate effectiveness, the 

Commission published the NYSE’s rule 

change that established Arca Securities 

as a facility of the NYSE for purposes of 

routing orders to away market centers 

for execution in compliance with NYSE 

Rules and Regulation NMS.14 Pursuant 

to NYSE Rule 17, Arca Securities 

receives its routing instructions from the 

NYSE and reports any such executions 

back to the NYSE.15 Arca Securities has 

no discretion and cannot change the 

terms of an order or the routing 

instructions.16 Moreover, each type of 

order is subject to the same principles 

governing the Exchange’s authority to 

route orders to away market centers, 

namely: Use of Arca Securities for 

outbound routing is only available to—

and is optional for—NYSE Members, the 

primary regulatory responsibility for 

Arca Securities lies with an unaffiliated 

SRO, and, as clarified herein, 

appropriate procedures are in place to 

manage any conflicts of interest or 

potential information advantages. In this 

capacity as a facility of the NYSE, Arca 

Securities receives the routing 

instructions from the NYSE and routes 

the orders to various away market 

centers, including NYSE Arca, for 

execution. 

c. Record Keeping 

As mentioned above, in the 

Abrogation Order, the Commission 

noted the potential for conflicts of 

interest in instances where a member 

firm is affiliated with an exchange to 

which it is routing orders. 

In order to manage these concerns, 

with respect to orders routed to NYSE 

by Arca Securities, an NYSE member, in 

its capacity as a facility of NYSE Arca, 


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51680 Federal Register / Vol. 73, No. 172 / Thursday, September 4, 2008 / Notices 

17The Exchange, NYSE Regulation, and SEC staff, 

may agree going forward to reduce the number of 

applicable or relevant surveillances that form the 

scope of the agreed upon report. 

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

19 15 U.S.C. 78f(b)(5). 

the Exchange notes that Arca Securities 

is subject to independent oversight and 

enforcement by the Financial Industry 

Regulatory Authority (‘‘FINRA’’), an 

unaffiliated self-regulatory organization 

(‘‘SRO’’) that is Arca Securities’

designated examining authority. In this 

capacity, FINRA is responsible for 

examining Arca Securities with respect 

to its books and records and capital 

obligations, and shares with NYSE 

Regulation, Inc. (‘‘NYSE Regulation’’) 

the responsibility for reviewing Arca 

Securities’ compliance with intermarket 

trading rules such as SEC Regulation 

NMS. In addition, through an agreement 

between FINRA and the NYSE pursuant 

to the provisions of Rule 17d–2 under 

the Act, FINRA’s staff reviews for Arca 

Securities’ compliance with other NYSE 

rules through FINRA’s examination 

program. NYSE Regulation monitors 

Arca Securities for compliance with 

NYSE trading rules, subject, of course, 

to SEC oversight of NYSE Regulation’s 

regulatory program. 

In order to alleviate any residual 

concerns the Commission may have 

regarding the potential for conflicts of 

interest, the Exchange notes that NYSE 

Regulation has agreed with the 

Exchange that it will collect and 

maintain the following information of 

which NYSE Regulation staff becomes 

aware—namely, all alerts, complaints, 

investigations and enforcement actions 

where Arca Securities (in its capacity as 

a facility of NYSE Arca, routing orders 

to the NYSE) is identified as a 

participant that has potentially violated 

NYSE or applicable SEC rules—in an 

easily accessible manner, so as to 

facilitate any review conducted by the 

SEC’s Office of Compliance Inspections 

and Examinations. NYSE Regulation has 

further agreed with the Exchange that it 

will provide a report to the Exchange’s 

Chief Regulatory Officer, on at least a 

quarterly basis, which: (i) Quantifies all 

alerts (of which NYSE Regulation is 

aware in its tracking system) that 

identify Arca Securities as a participant 

that has potentially violated NYSE or 

SEC rules and (ii) quantifies the number 

of all investigations that identify Arca 

Securities as a participant that has 

potentially violated NYSE or SEC 

rules.17

d. New Policies and Procedures. 

Finally, in the Abrogation Order, the 

Commission noted the potential for 

informational advantages that could 

place an affiliated member of an 

exchange at a competitive advantage 

vis-a`-vis other non-affiliated members. 

In response to this concern, with 

respect to Arca Securities being an 

affiliated member of the NYSE, the 

Exchange is proposing to amend 

Exchange Rule 2B. As amended, 

Exchange Rule 2B will require the 

implementation of policies and 

procedures that are reasonably designed 

to prevent Arca Securities from acting 

on non-public information regarding 

NYSE systems prior to the time that 

such information is made available 

generally to all NYSE members 

performing inbound order routing 

functions. These policies and 

procedures would include systems 

development protocols to facilitate an 

audit of the efficacy of these policies 

and procedures. 

Specifically, Exchange Rule 2B shall 

provide as follows: 

The holding company owning both the 

Exchange and Archipelago Securities LLC 

shall establish and maintain procedures and 

internal controls reasonably designed to 

ensure that Archipelago Securities, L.L.C. 

does not develop or implement changes to its 

system on the basis of non-public 

information regarding planned changes to 

Exchange systems, obtained as a result of its 

affiliation with the Exchange, until such 

information is available generally to similarly 

situated members of the Exchange in 

connection with the provision of inbound 

order routing to the Exchange. 

The Exchange believes these measures 

will effectively address the concerns 

identified by the Commission regarding 

the potential for informational 

advantages favoring Arca Securities visa`-vis other non-affiliated NYSE 

members. 

e. Pilot Period 

The Exchange proposes that the 

Commission authorize the NYSE to 

receive inbound routes of PO Plus 

Orders from Arca Securities for a pilot 

period of twelve months from the date 

of the approval of this rule filing. The 

Exchange believes that this pilot period 

is of sufficient length to permit both the 

Exchange and the Commission to assess 

the impact of the rule change described 

herein. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) 18 of the 

Act, in general, and furthers the 

objectives of Section 6(b)(5),19 in 

particular, in that it is designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, and to remove 

impediments to and perfect the 

mechanisms of a free and open market 

and a national market system. 

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 the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve the 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 

rule-comments@sec.gov. Please include 

File Number SR–NYSE–2008–76 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR-NYSE–2008–76. This file 

number should be included on the 

subject line if e-mail is used. To help the 


sroberts on PROD1PC77 with NOTICES
Federal Register / Vol. 73, No. 172 / Thursday, September 4, 2008 / Notices 51681 

20 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. 

4See Securities Exchange Act Release No. 57377 

(Feb. 25, 2008), 73 FR 11177 (February 29, 2008) 

(SR–NYSEArca–2008–19). 5 15 U.S.C. 78s(3)(A). 

6 7 CFR 240.19b–4. 

7See Securities Exchange Act Release No. 57648 

(April 11, 2008), 73 FR 20981 (April 17, 2008) 

(order abrogating NYSE Arca Rule 7.31(x)). 

8See id. 

9See NYSE Arca Equities Rule 1.1(yy) for the 

definition of ‘‘User.’’ Under Rule 1.1(yy), the term 

User means any ETP Holder or Sponsored 

Participant who is authorized to obtain access to the 

NYSE Marketplace pursuant to NYSE Arca Equities 

Rule 7.29. PO Orders, similar to all other order 

types offered by the Exchange, are available only to 

authorized Users. 

10See NYSE Arca Equities Rule 7.31(x). 

11The Exchange believes that the proposed 

functionality is substantially similar to the 

‘‘Directed Order’’ type currently offered by The 

NASDAQ Stock Market LLC (‘‘Nasdaq’’), which 

allows Nasdaq members to enter orders to be routed 

to a user-designated market center other than 

Nasdaq, without first interacting with the Nasdaq 

order book. See Securities Exchange Act Release 

No. 55405 (March 6, 2007), 72 FR 11069 (March 12, 

2007) (SR–NASDAQ–2007–020). 

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 

Section, 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 will also be available 

for inspection and copying at the 

principal office of the self-regulatory 

organization. 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–

2008–76 and should be submitted on or 

before September 25, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–20466 Filed 9–3–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58431; File No. SR–

NYSEArca–2008–90] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change by 

NYSE Arca, Inc. Amending NYSE Arca 

Equities Rule 7.31(x) To Clarify the 

Permissible Order Entry Time and 

Eligibility of Its Primary Only Order and 

Amending NYSE Arca Equities Rule 

14.3 To Establish Procedures 

Designed To Manage Potential 

Informational Advantages Resulting 

From the Affiliation Between the 

Exchange and Archipelago Securities 

L.L.C. 

August 27, 2008. 

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 August 

20, 2008, NYSE Arca, Inc. (‘‘NYSE 

Arca’’ or the ‘‘Exchange’’) through its 

wholly-owned subsidiary, NYSE Arca 

Equities, Inc. (‘‘NYSE Arca Equities’’ or 

the ‘‘Corporation’’), filed with the 

Securities and Exchange Commission 

(the ‘‘SEC’’ or ‘‘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 (i) amend 

NYSE Arca Equities Rule 7.31(x) in 

order to clarify the permissible order 

entry time and eligibility of its Primary 

Only Order (‘‘PO Order’’) and (ii) amend 

NYSE Arca Equities Rule 14.3 in order 

to establish procedures designed to 

manage potential informational 

advantages resulting from the affiliation 

between the Exchange and Archipelago 

Securities L.L.C. ((i) and (ii) together, 

the ‘‘Proposed Rule Change’’). The text 

of the proposed rule change 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 

On February 13, 2008, NYSE Arca 

filed with the Commission a proposed 

rule change to amend NYSE Arca 

Equities Rule 7.31(x) (the ‘‘PO Plus 

Proposal’’).4 NYSE Arca filed that rule 

change as a ‘‘non-controversial’’

proposed rule change pursuant to 

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

19b–4(f)(6) 6 thereunder, which 

rendered it effective upon filing with 

the Commission. On April 11, 2008, the 

Commission issued an order abrogating 

the PO Plus Proposal (the ‘‘Abrogation 

Order’’).7

In the Abrogation Order, the 

Commission noted its concern regarding 

(i) the potential for conflicts of interest 

in instances where a member firm is 

affiliated with an exchange to which it 

is routing orders and (ii) the potential 

for informational advantages that could 

place an affiliated member of an 

exchange at a competitive advantage 

vis-a`-vis other non-affiliated members.8

NYSE Arca is submitting the 

Proposed Rule Change to re-propose the 

PO Plus Order and to propose a new 

NYSE Arca Equities Rule 14.3(e). The 

Proposed Rule Change is intended to 

provide additional flexibility and 

increased system functionality for NYSE 

Arca Users 9 by modifying the 

operability and eligibility of PO Orders, 

and to address the issues noted by the 

Commission in the Abrogation Order. 

a. The PO Plus Order 

The PO Order is a market or limit 

order that is routed to the primary, 

listing market, without sweeping the 

NYSE Arca book.10 PO Orders are thus 

a form of directed order, an order type 

that is commonly used by exchange 

members and offered by exchanges and 

other market centers to enable firms to 

discharge their obligations under 

Regulation NMS and other rules.11 This 

is an order functionality offered by the 

Exchange to its Users. NYSE Arca Users 


sroberts on PROD1PC77 with NOTICES