Federal Register / Vol. 73, No. 175 / Tuesday, September 9, 2008 / Notices 52439 

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. 58284 

(August 1, 2008), 73 FR 46086 (August 7, 2008) 

(SR–Amex–2008–62). 

5 15 U.S.C. 78f. 

6As noted, Amex will be renamed NYSE 

Alternext US LLC. For the avoidance of doubt, 

NYSE Alternext US LLC will be a self-regulatory 

organization distinct from NYSE Euronext’s 

European-market subsidiary, NYSE Alternext. See 

SR–Amex–2008–62. 

7See Securities Exchange Act Release No. 58265 

(July 30, 2008), 73 FR 46075 (August 7, 2008) (SR–

Amex–2008–63). 

8See Securities Exchange Act Release Nos. 56085 

(July 17, 2007), 72 FR 40348 (July 24, 2007) (SR–

NYSE–2007–09) (adopting NYSE Rule 18); 56718 

(October 29, 2007), 72 FR 62506 (November 5, 2007) 

(SR–NYSE–2007–95) (approving certain 

amendments to NYSE Rule 18). NYSE Rule 18 

defines an Exchange system failure as a 

‘‘malfunction of the Exchange’s physical 

Continued 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58450; File No. SR–NYSE–

2008–78] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing of Proposed Rule Change 

Amending NYSE Rule 18 To Allow 

NYSE Alternext US LLC To Participate 

in the Compensation Fund Established 

by the NYSE To Reimburse Claimants 

for Losses Associated With NYSEOperated System Failures 

September 2, 2008. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on August 

26, 2008, the 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 Exchange. 

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 

Rule 18 (Compensation in Relation to 

Exchange System Failure) to provide, as 

part of the migration of NYSE Alternext 

US LLC (‘‘NYSE Alternext’’) trading 

onto systems and facilities operated by 

NYSE for the benefit of NYSE Alternext, 

that NYSE Alternext may participate in 

the compensation fund established by 

the Exchange to reimburse claimants for 

losses associated with Exchangeoperated system failures. The text of the 

proposed rule change is available at 

NYSE’s principal office, 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 

This proposal is to amend NYSE Rule 

18 to provide that NYSE Alternext will 

be permitted to participate in the 

compensation fund established by the 

Exchange to reimburse claimants for 

Exchange-operated system failures. 

Background 

As described more fully in a related 

rule filing, NYSE Euronext is expected 

to acquire The Amex Membership 

Corporation through a series of mergers 

(the ‘‘Mergers’’) pursuant to an 

Agreement and Plan of Merger, dated 

January 17, 2008 (the ‘‘Merger 

Agreement’’).4 Upon completion of the 

Mergers, the American Stock Exchange 

LLC (‘‘Amex’’), currently a subsidiary of 

The Amex Membership Corporation, 

will become a subsidiary of NYSE 

Euronext and will continue to operate as 

a national securities exchange registered 

under the Act.5 Following the Mergers, 

the name of the new exchange will be 

NYSE Alternext US LLC.6

In connection with the Mergers, NYSE 

Alternext will relocate all equities 

trading currently conducted on or 

through the Amex legacy trading 

systems and facilities located at 86 

Trinity Place, New York, New York, to 

the NYSE trading systems and facilities 

located at 11 Wall Street, New York, 

New York (the ‘‘NYSE Alternext 

Trading Systems’’), which will be 

operated by the NYSE on behalf of 

NYSE Alternext (the ‘‘Equities 

Relocation’’). NYSE Euronext has 

determined that extending its existing 

trading systems and facilities to NYSE 

Alternext will be more efficient than 

maintaining two separate trading 

platforms for trading equities. At the 

same time, because NYSE Euronext 

reports its financial results on a 

consolidated basis, it does not plan to 

break out and allocate technology costs 

between New York Stock Exchange LLC 

(the registered self-regulatory 

organization that owns and operates the 

NYSE market) and NYSE Alternext US 

LLC (the registered self-regulatory 

organization that will own and operate 

the NYSE Alternext equities market 

after the merger is complete). 

In connection with the Equities 

Relocation, NYSE Alternext will adopt 

NYSE Rules 1–1004 in substantially 

their existing form as the ‘‘NYSE 

Alternext Equities Rules.’’ 7 Because the 

NYSE Alternext Trading Systems will 

be operated by the NYSE for the benefit 

of NYSE Alternext, the NYSE Alternext 

Equities Rules will be substantively 

identical to the existing NYSE Rules, 

subject to certain changes necessary to 

apply such rules to NYSE Alternext. 

Among the rules that NYSE Alternext 

is adopting is a version of NYSE’s Rule 

18, which establishes that NYSE 

Alternext members may be compensated 

for losses incurred as a result of an 

NYSE Alternext system malfunction 

(NYSE Alternext rules elsewhere 

provide that the exchange is not liable 

for losses resulting from the use of its 

systems or facilities), and prescribes the 

procedures for submitting claims to the 

fund. If there is a system malfunction, 

NYSE Alternext members will be able to 

submit claims to NYSE Alternext 

pursuant to that rule. 

Under NYSE’s Rule 18, the Exchange 

has established a monthly fund, 

described in more detail below, from 

which valid compensation claims are 

paid. Because of the consolidated 

accounting referenced above, however, 

NYSE Euronext does not intend to 

establish a separate compensation fund 

for NYSE Alternext members under 

NYSE Alternext’s Rule 18. Instead, 

NYSE Alternext members who submit 

claims will be paid directly by NYSE 

Alternext. Through this filing, the 

Exchange is providing a mechanism for 

NYSE Alternext itself to seek 

reimbursement for the amounts that it 

undertakes to pay out to its members 

under its Rule 18 as a result of an NYSE 

system malfunction. 

Current NYSE Rule 18 and Proposed 

NYSE Alternext Rule 18 

NYSE Rule 18, adopted by the 

Exchange in 2007, provides a procedure 

for compensating claimants in the event 

of an Exchange system failure.8 In its 


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52440 Federal Register / Vol. 73, No. 175 / Tuesday, September 9, 2008 / Notices 

equipment, devices, and/or programming which 

results in an incorrect execution or no execution of 

an order that was received in Exchange systems.’’

However, misuse of Exchange systems is not 

considered such a system failure. See NYSE Rule 

18(b). As proposed by Amex, upon the Equities 

Relocation, those systems and facilities will be 

deemed systems and facilities of NYSE Alternext 

for the purposes of administering NYSE Alternext’s 

compensation plan. 

9Because NYSE will operate the systems and 

facilities for NYSE Alternext, there may not be a 

separate ‘‘Division of Floor Operations’’ for NYSE 

Alternext. A member of the NYSE’s Floor 

Operations staff will be cross-designated as the 

Floor Operations representative for NYSE Alternext 

for purposes of the NYSE Alternext rules that 

require interfacing with the Division of Floor 

Operations. NYSE Alternext members would 

submit their claims to this representative. 

10See NYSE Rule 18(a). 

11See NYSE Rule 18(d)–(f). 

12See NYSE Rule 18(c). 13See NYSE Rule 18(c). 14See SR–Amex–2008–63. 

filing to amend its rules, Amex has 

proposed to adopt substantially the 

same rule. Accordingly, the process 

described below will be the same 

process for members of both NYSE and 

NYSE Alternext. 

Both rules require claimants to 

informally notify their respective 

Exchanges of a suspected Exchange 

system failure by the opening of the 

next business day following an incident, 

followed by formal written notice no 

later than end of the third business day 

after the incident.9 Net losses less than 

$500 are not eligible for compensation. 

Upon receipt of a claim, Exchange staff 

from the Division of Floor Operations 

verify that (i) a valid order was accepted 

into the Exchange’s systems, and (ii) an 

Exchange system failure occurred 

during the execution or handling of that 

order. If all of the criteria for submitting 

a claim have been met, the claim will 

be qualified for processing with all other 

eligible claims at the end of the calendar 

month in which the incident occurred.10

Each Exchange will appoint a 

Compensation Review Panel consisting 

of three Floor Governors and three 

Exchange employees, who will meet 

and review all qualified claims 

submitted for each calendar month and 

administer any payments to be made 

thereon. As part of their determinations, 

the respective Compensation Review 

Panels review the actions of the 

claimant before and after the error 

occurred in order to determine if any of 

the claimant’s actions contributed to the 

loss sustained. The Compensation 

Review Panels may increase or reduce 

the amount deemed eligible for payment 

as a result of their review. All decisions 

by the respective Compensation Review 

Panel are final, except that where there 

is a deadlock, the final determination 

will be made by the Exchange CEO or 

a designee.11

Payment of Valid Claims 

Currently, claims by NYSE members 

are paid from a compensation fund 

established by the Exchange. Each 

month the Exchange allots $500,000 

(‘‘Monthly Allotment’’) to be used for 

payments to NYSE member claimants 

who qualify for compensation under 

NYSE Rule 18. The Monthly Allotments 

do not aggregate and, in the event that 

less than $250,000 of the Monthly 

Allotment is paid out in any given 

month, $50,000 of the remaining 

Monthly Allotment (‘‘Supplemental 

Allotment’’) is added to a supplemental 

fund available for payment in 

subsequent calendar months. The 

Supplemental Allotment is used to pay 

NYSE member claims only after the 

Monthly Allotment is exhausted. If 

NYSE member claims are satisfied by 

the Monthly Allotment, the 

Supplemental Allotment, or any unused 

portion thereof, is carried forward.12

If the total dollar amount of approved 

NYSE member claims is less than the 

Monthly Allotment, then all claims will 

be paid in full. If the total amount of 

approved NYSE member claims exceeds 

the Monthly Allotment, then any 

Supplemental Allotment will be added 

to the Monthly Allotment in order to 

satisfy approved claims. In the event 

that the approved claims for a given 

month exceed the sum of the Monthly 

Allotment and any Supplemental 

Allotment, the approved claims will be 

paid out to claimants based on the 

proportion that each eligible claim bears 

to the total amount of all approved 

claims.13

Proposed Amendments 

The Exchange proposes to amend 

NYSE Rule 18 to add supplemental 

material permitting NYSE Alternext to 

participate alongside NYSE members in 

the compensation fund established by 

the Exchange to reimburse claimants for 

Exchange-operated system failures. 

As described above, upon the Equities 

Relocation, all equities trading currently 

conducted on Amex legacy trading 

systems will take place on the NYSE 

Alternext Trading Systems, which are 

the same trading systems as those of the 

Exchange. As a result, any system 

failure on the Exchange will affect 

equally both NYSE members and 

member organizations and NYSE 

Alternext members and member 

organizations. Through the proposed 

amendments, the Exchange wants to 

ensure that members and member 

organizations of both SROs are treated 

fairly and equitably in the event of such 

a system failure, while maintaining and 

respecting the distinctions between 

them. 

Under the proposed amendments, 

NYSE Alternext members and member 

organizations affected by the failure of 

the NYSE Alternext Trading Systems 

would submit claims for compensation 

to NYSE Alternext pursuant to the 

proposed NYSE Alternext Equities Rule 

18.14 NYSE Alternext members and 

member organizations would not be able 

to submit their claims directly to the 

NYSE. NYSE Alternext’s Compensation 

Review Panel will then decide the 

validity of NYSE Alternext claims. 

After its Compensation Review Panel 

has determined the number and amount 

of claims that NYSE Alternext deems 

valid, NYSE Alternext would submit to 

the NYSE a separate claim for each valid 

claim made by NYSE Alternext 

members or member organizations, 

subject to the same requirements under 

NYSE Rule 18 as any other NYSE 

claimant. NYSE Alternext will not, 

however, be required to provide verbal 

notice of its claims to the Exchange’s 

Division of Floor Operations. 

In the event that the total amount of 

valid claims by NYSE members and 

NYSE Alternext exceeds the available 

funds, NYSE Alternext would receive a 

partial payment of claims pursuant to 

NYSE Rule 18(c), and NYSE Alternext’s 

obligation to compensate its members 

for valid claims would be reduced by a 

like percentage. In view of (i) The 

probable volume of trading on NYSE 

Alternext; (ii) the fact that to date, the 

existing compensation fund has been 

sufficient to pay all valid claims in full; 

and (iii) the current amount available in 

the supplemental fund, the Exchange 

does not anticipate that the additional 

claims by NYSE Alternext would create 

a substantial burden on the fund in the 

event of a system malfunction 

In the event that a reduction is 

required, in calculating any such 

reduction, NYSE officials would 

consider each claim submitted by NYSE 

Alternext as a separate claim, so that all 

claimants from both the Exchange and 

NYSE Alternext will share equitably 

from the Compensation Fund. As 

described more fully in the related filing 

by Amex, payments against valid claims 

submitted by NYSE Alternext members 

are subject to being reduced by the 

amount that NYSE Alternext’s claims 

against the NYSE fund are reduced. 

The Exchange also proposes technical 

changes to NYSE Rule 18, including 

renumbering subparagraphs (c)(iv)–

(c)(vi), accordingly. 


jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 73, No. 175 / Tuesday, September 9, 2008 / Notices 52441 

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

16The second paragraph of the Statutory Basis 

section appears in the Form 19b–4 portion of SR–

NYSE–2008–78 filing, but not in Exhibit 1. In a 

phone call with Jason Harman, Consultant, NYSE 

Regulation on September 2, 2008, Sarah Albertson, 

Attorney, Division of Trading and Markets, SEC, 

confirmed that NYSE inadvertently omitted this 

paragraph of the Statutory Basis section in Exhibit 

1. Mr. Harman asked that the paragraph be included 

as the second paragraph under the Statutory Basis 

heading in this Notice. 17 17 CFR 200.30–3(a)(12). 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with and 

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

of the Act,15 in that 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 that the 

proposed amendments to NYSE Rule 18 

will enhance the efficient execution of 

transactions and fair competition among 

broker-dealers and markets and provide 

a fair and reasonable process by which 

both NYSE members and member 

organizations and NYSE Alternext 

members and member organizations 

may petition for compensation when 

they suffer a loss due to a failure of 

Exchange-operated systems.16

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 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–2008–78 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–2008–78. 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 the filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–NYSE–

2008–78 and should be submitted on or 

before September 30, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–20808 Filed 9–8–08; 8:45 am] 

BILLING CODE 8010–01–P 

SMALL BUSINESS ADMINISTRATION 

Data Collection Available for Public 

Comments and Recommendations 

ACTION: Notice and request for 

comments. 

SUMMARY: In accordance with the 

Paperwork Reduction Act of 1995, this 

notice announces the Small Business 

Administration’s intentions to request 

approval on a new and/or currently 

approved information collection. 

DATES: Submit comments on or before 

November 10, 2008. 

ADDRESSES: Send all comments 

regarding whether this information 

collection is necessary for the proper 

performance of the function of the 

agency, whether the burden estimates 

are accurate, and if there are ways to 

minimize the estimated burden and 

enhance the quality of the collection, to 

Gail Hepler, Chief 7a Loan Policy 

Branch, Office of Financial Assistance, 

Small Business Administration, 409 3rd 

Street, SW., 8th Floor, Washington, DC 

20416. 

FOR FURTHER INFORMATION CONTACT: Gail 

Hepler, Chief 7a Loan Policy Branch, 

Office of Financial Assistance, 202–

205–7530 gail.hepler@sba.gov; Curtis B. 

Rich, Management Analyst, 202–205–

7030 curtis.rich@sba.gov. 

SUPPLEMENTARY INFORMATION: In 

November 2005 SBA piloted a 1-year 

loan program specifically targeted to the 

counties and parishes that were 

declared disaster areas as a result of 

Hurricanes Katrina and Rita. This pilot 

was extended to December 30, 2008. 

Lenders use primarily their own 

application, however, SBA requires the 

minimal information requested on these 

forms from lenders and borrowers to 

carry out its loan monitoring, portfolio 

risk management, and lender oversight 

activities associated with this loan pilot. 

Title: ‘‘Gulf Coast Relief Financing 

Pilot Information Collection.’’

Description of Respondents: Small 

businesses devastated by Hurricanes 

Katrina and Rita. 

Form Numbers: 2276 A, B, C and 

2281. 

Annual Responses: 120. 


jlentini on PROD1PC65 with NOTICES