Federal Register / Vol. 73, No. 191 / Wednesday, October 1, 2008 / Notices 57183 

19 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See also NYSE Rules 60(e)(i). It is important to 

note that not all securities on the NYSE are eligible 

for automatic executions. In accordance with 

Exchange Rule 1000(a)(vi) those securities that are 

priced at or more than $1000 per share are defined 

as ‘‘high-priced’’ and do not receive automatic 

executions and, therefore, are not assigned an LRP 

value ranges. 

4See NYSE Rule 60(e)(ii)(C). Currently, in an 

effort to increase the availability of NYSE quotes 

eligible for automatic execution, the NYSE will 

revert to auto-quoting in situations where the LRP 

has been hit but the market is not locked or crossed 

in five seconds. See Liquidity Replenishment Points 

(LRPs) Timer Pilot (August 20, 2008), NYSE Trader 

Updates available at: http:// 

traderupdates.nyse.com/2008/08/liquidity_

replenishment_points_2.html . 

5The Display Book system is an order 

management and execution facility. The Display 

Book system receives and displays orders to the 

specialists, contains the Book, and provides a 

mechanism to execute and report transactions and 

publish the results to the Consolidated Tape. The 

Display Book system is connected to a number of 

other Exchange systems for the purposes of 

comparison, surveillance, and reporting 

information to customers and other market data and 

national market systems. 

6See NYSE Rule 60(e)(ii)(C). 

and enforce the enumerated portions of 

Phlx Rules 170–174, 181 and 185 

regarding XLE, Market Makers, 

MMATs and PRO in light of the 

Shutdown. 

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–Phlx–2008–65 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–Phlx–2008–65. This file 

number should be included on the 

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

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for inspection and copying in 

the Commission’s Public Reference 

Room, 100 F Street, NE., Washington, 

DC 20549, on official business days 

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

Copies of 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–Phlx–2008–65 and should 

be submitted on or before October 22, 

2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.19

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–22960 Filed 9–30–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58629; File No. SR–NYSE– 

2008–85] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change Amending 

NYSE Rule 1000 (‘‘Automatic 

Execution of Limit Orders Against 

Orders Reflected in NYSE Published 

Quotation’’) 

September 24, 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 

September 17, 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 and II 

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 

Exchange Rule 1000(a)(iv)(C) to modify 

the current LRP value ranges. The text 

of the proposed rule change is available 

at NYSE, http://www.nyse.com, and the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange 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 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 proposes to amend 

Exchange Rule 1000(a)(iv)(C) (Liquidity 

Replenishment Point) to widen the 

value ranges for the calculation of 

liquidity replenishment points 

(‘‘LRPs’’). 

Background 

Pursuant to NYSE Rule 1000(a)(iv), 

LRPs are pre-determined price points 

that function to moderate volatility, 

improve price continuity, and foster 

market quality in a particular security 

by temporarily converting the electronic 

market to an auction market and 

permitting new orders, the Crowd, or 

the specialist, to add liquidity.3

Pursuant to NYSE Rule 60, Autoquote 

is suspended when an LRP is reached 

and resumes in no more than five to ten 

seconds after the LRP is reached.4

Autoquote resumes unless there is 

interest on the NYSE Display Book

system 5 that would lock or cross the 

market. In such case, Autoquote will 

resume with a manual transaction.6

LRPs are calculated by adding and 

subtracting a value to the security’s last 

sale price. The LRP values are based on 

an examination of trading data and vary 

based on the security’s NYSE average 

daily volume (‘‘ADV’’), price, and 

volatility. The values used to calculate 

the LRP’s range do not change intraday 


jlentini on PROD1PC65 with NOTICES
57184 Federal Register / Vol. 73, No. 191 / Wednesday, October 1, 2008 / Notices 

7 15 U.S.C. 78f(b)(5). 

8 15 U.S.C. 78k–1(a)(1). 

9 15 U.S.C. 78s(b)(3)(A). 

10 17 CFR 240.19b–4(f)(6). 

11 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule 

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

organization to give the Commission 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. 

NYSE has satisfied this requirement. 

12 17 CFR 240.19b–4(f)(6)(iii). 

13For purposes only of waiving the operative 

delay for this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

and are disseminated daily by the 

Exchange on its Web site. 

Modification to LRP Value Ranges 

The Exchange proposes to amend 

NYSE Rule 1000(a)(iv)(C) to double the 

current LRP ranges in order to limit the 

number of times that an LRP is reached 

and the total number of times during the 

trading day that automatic execution is 

suspended as a result of an LRP being 

triggered. In this way the Exchange will 

allow for more continuous automatic 

executions of securities. While the 

purpose of the LRP is to dampen 

volatility and to provide market 

participants with time to react, the 

Exchange believes that the proposed 

amendment is necessary to lessen 

artificial limitations on trading and will 

ultimately provide beneficial trading 

opportunities for its customers. As a 

means of controlling volatility, LRPs are 

intended to be triggered infrequently, 

i.e., when the market is experiencing a 

large price movement (based on a 

security’s typical trading characteristics 

or other market conditions) over short 

periods of time during the trading day. 

If an LRP is triggered too frequently 

trading in the security is overly 

restrained and does not meet the 

competitive needs of NYSE customers. 

As such the NYSE believes that 

doubling the current LRP value ranges 

will better facilitate the natural trading 

pattern of a particular security. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with and 

furthers the objectives of Section 

6(b)(5) 7 of the Act, in that it is designed 

to prevent fraudulent and manipulative 

practices, to promote just and equitable 

principles of trade, to remove 

impediments to, and perfect the 

mechanisms of, a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest. The proposed rule 

change also is designed to support the 

principles of Section 11A(a)(1) 8 in that 

it seeks to assure economically efficient 

execution of securities transactions, 

make it practicable for brokers to 

execute investors’ orders in the best 

market and provide an opportunity for 

investors’ orders to be executed without 

the participation of a dealer. The 

Exchange’s proposal to double the 

current LRP ranges is consistent with 

these objectives in that it is intended to 

limit the number of times that an LRP 

is reached and the total number of times 

during the trading day that automatic 

execution is suspended as a result of an 

LRP being triggered. 

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 

The proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 9 and Rule 19b–4(f)(6) 

thereunder 10 because the foregoing 

proposed rule change: (1) Does not 

significantly affect the protection of 

investors or the public interest; (2) does 

not impose any significant burden on 

competition; and (3) by its terms, does 

not become operative for 30 days after 

the date of filing, or such shorter time 

as the Commission may designate if 

consistent with the protection of 

investors and the public interest. 

A proposed rule change filed under 

Rule 19b–4(f)(6) normally may not 

become operative prior to 30 days after 

the date of filing.11 However, Rule 19b– 

4(f)(6)(iii) 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 asked the Commission to 

waive the 30-day operative delay, as 

specified in Rule 19b–4(f)(6)(iii),12

which would make the rule change 

effective and operative upon filing. The 

Commission believes that waiving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest because the proposal is 

designed to benefit market participants 

and customers by providing for more 

continuous automatic executions of 

securities traded on the Exchange.13

Specifically, the proposed rule change 

seeks to maintain LRPs as a mechanism 

to moderate volatility, but proposes to 

adjust the current LRP ranges in order 

to limit the number of times during the 

trading day that automatic execution is 

suspended as a result of an LRP being 

triggered. Accordingly, the Commission 

designates the proposed rule change 

effective and operative upon filing with 

the Commission. 

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 

Number SR–NYSE–2008–85 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–2008–85. 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 


jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 73, No. 191 / Wednesday, October 1, 2008 / Notices 57185 

14 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 Lehman Bros Pfd C (LEH–PC); Lehman Bros 

5.67 D (LEH–PD); Lehman Bros Dep SH F (LEH– 

PF); Lehman Dep Pfd G (LEH–PG); Lehman Pfd J 

(LEH–PJ); Lehman CP III 6.375 K (LEH–PK); 

Lehman Br Cap Tr IV (LEH–PL); Lehman Bro Cap 

V 6.0 (LEH–PM); and Lehman Br Hld 6.24 N (LEH– 

PN). 

5See Securities Exchange Act Release No. 51808 

(June 9, 2005), 17 CFR Parts 200, 201, 230, 240, 242, 

249 and 270. 

6See 17 CFR 242.611. 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for inspection and copying in 

the Commission’s Public Reference 

Room, 100 F Street, NE., Washington, 

DC 20549, on official business days 

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

Copies of such filing also will be 

available for inspection and copying at 

the principal 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 publicly available. All 

submissions should refer to File 

Number SR–NYSE–2008–85 and should 

be submitted on or before October 22, 

2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.14

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–22964 Filed 9–30–08; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58631; File No. SR–NYSE– 

2008–84] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by New York 

Stock Exchange LLC Proposing To 

Suspend the Operation of Certain 

NYSE Rules To Respond to the Impact 

to the Marketplace of the Events of 

September 15, 2008, Including the 

Bankruptcy Filing by Lehman Brothers 

Holding Inc. 

September 24, 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 

September 15, 2008, 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 and II 

below, which Items have been prepared 

by the self-regulatory 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 

New York Stock Exchange LLC 

(‘‘NYSE’’ or the ‘‘Exchange’’) is 

proposing to suspend the operation of 

certain NYSE rules to respond to the 

impact to the marketplace of the events 

of September 15, 2008, including the 

bankruptcy filing by Lehman Brothers 

Holding Inc. (LEH) and the proposed 

acquisition of Merrill Lynch by Bank of 

America. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

NYSE 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. NYSE 

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 

On Monday, September 15, 2008, the 

markets experienced almost 

unprecedented turmoil that impacted 

some of the most significant players on 

Wall Street: Lehman Brothers Holding 

Inc. (LEH) (‘‘Lehman’’) filed for 

bankruptcy protection in the United 

States District Court for the Southern 

District of New York under Chapter 11 

of the U.S. bankruptcy code; Bank of 

America agreed to acquire Merrill Lynch 

in an all-stock transaction; and 

American Insurance Group, Inc. (‘‘AIG’’) 

announced a significant restructuring. 

In response to these events, the 

Exchange undertook a number of steps 

to ensure continuity of the marketplace. 

First, the Exchange invoked NYSE Rule 

48, which authorizes the Exchange to 

suspend certain rules relating to the 

opening of trading at the Exchange. 

Second, because the pre-opening market 

in LEH suggested that the stock would 

open below $1.05, at 9 a.m. on 

September 15, 2008, the Exchange 

announced a Rule 123D(3) ‘‘Sub-penny 

trading’’ condition for LEH and halted 

trading in LEH at the Exchange. Third, 

to ensure a fair and orderly market in all 

securities listed at the Exchange, the 

Exchange announced that, pursuant to 

NYSE Rule 103.11, NYSE-listed 

securities for which Lehman Brothers 

Market Makers, a division of Lehman 

Brothers Inc. (‘‘Lehman Brothers’’), had 

been the specialist, would be 

temporarily reallocated to Spear, Leeds 

& Kellogg Specialists LLC (‘‘Spear 

Leeds’’). Notwithstanding the 

reallocation, these stocks will continue 

to trade using Lehman Brothers 

technology and staff until a more 

permanent allocation can be effected. 

To ensure a fair and orderly market 

during this period of market stress, the 

Exchange is seeking temporary relief 

from certain NYSE rules that are 

implicated by the Lehman Brothers 

situation. In particular, the Exchange is 

proposing to suspend the operation of 

NYSE Rule 123D(3) on September 15, 

2008 for derivative securities of LEH 

that trade at the Exchange (‘‘LEH 

Preferreds’’) 4 that would open at a price 

of $1.05 or less. This proposed 

suspension relates only to the opening 

of LEH Preferreds on September 15, 

2008. Immediately following the 

opening of such securities, the Exchange 

intends to halt trading of LEH Preferreds 

pursuant to NYSE Rule 123D(3) and 

invoke a Sub-penny trading condition. 

In addition, pending the installation 

of telephone lines at Lehman Brothers’ 

specialist posts that are connected to 

Spear Leeds, the Exchange proposes to 

temporarily suspend NYSE Rule 36.30 

so that Spear Leeds may conduct 

permitted communications from those 

post locations via non-Exchange 

portable telephones. 

a. NYSE Rule 123D(3) 

(1) Background 

NYSE Rule 123D(3) provides that if a 

security would open on the Exchange at 

a price of $1.05 or less, trading on the 

Exchange shall be immediately halted 

because of a ‘‘Sub-penny trading’’ 

condition. The Exchange adopted Rule 

123D(3) in part to be compliant with 

Regulation NMS. 

Regulation NMS, adopted by the 

Securities and Exchange Commission 

(‘‘SEC’’) in April 2005,5 provides that 

each trading center intending to qualify 

for trade-through protection under 

Regulation NMS Rule 6116 is required 

to have a Regulation NMS-compliant 

trading system fully operational by 


jlentini on PROD1PC65 with NOTICES