Federal Register / Vol. 73, No. 196 / Wednesday, October 8, 2008 / Notices 58995 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 58265 

(July 30, 2008), 73 FR 46075 (SR–Amex–2008–63) 

(‘‘Notice’’). 

4See Securities Exchange Act Release No. 58284 

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

(SR–Amex–2008–62) (‘‘Acquisition Proposal’’). 

5See Securities Exchange Act Release No. 34– 

58673 (September 29, 2008) (SR–Amex–2008–62). 

6See proposed NYSE Alternext Equity Rule 2. 

7See proposed NYSE Alternext Equity Rules 300– 

308. 

8See proposed NYSE Alternext Equity Rule 311. 

9See proposed NYSE Alternext Equity Rule 312. 

10See proposed NYSE Alternext Equity Rule 313. 

11See NYSE Rules 325–465 (Operation of 

Member Organizations). 

12See proposed NYSE Alternext Equities Rules 

325–328. 

13See proposed NYSE Alternext Equities Rules 

430–434. 

14See proposed NYSE Alternext Equities Rule 

342, Supplementary Material .23. 

15See proposed NYSE Alternext Equities Rules 

401–414. 

16See proposed NYSE Alternext Equities Rule 

440. 

17See proposed NYSE Alternext Equities Rule 

410A. 

18See proposed NYSE Alternext Equities Rules 

416–424. 

19See Securities Exchange Act Release No. 56148 

(July 26, 2007), 72 FR 42146 (August 1, 2007) 

(Notice of Filing and Order Approving and 

Declaring Effective a Plan for the Allocation of 

Regulatory Responsibilities). 

20As discussed in the Acquisition Proposal, 

immediately following the closing of the Mergers, 

those persons and entities who were authorized to 

trade on Amex before the closing of the Mergers— 

including (1) Amex owners, lessees, or nominees of 

Regular Members or Options Principal Members 

(‘‘OPMs’’); (2) Amex limited trading permit holders; 

and (3) Amex associate members—will be deemed 

to have satisfied applicable qualification 

requirements necessary to trade on NYSE Alternext 

and issued trading permits (referred to as ‘‘86 

Trinity Permits’’) at no cost. The 86 Trinity Permit 

will authorize these persons and entities to 

continue to trade on the 86 Trinity Trading 

Systems. A holder of an 86 Trinity Permit will be 

able to apply for an NYSE Alternext equities license 

or options trading permit upon the Equities or 

Options Relocation, as applicable. After the Equities 

Relocation, a holder of an 86 Trinity Permit will be 

able to trade only those products that have not 

migrated to the NYSE Alternext Trading Systems. 

After the Options Relocation, the 86 Trinity Permits 

will be canceled. See Notice, 73 FR at 46076. 

21The Exchange has stated that, following the 

closing of the transaction, the Exchange will work 

with FINRA as its agent to ensure that the 

Exchange’s membership requirements are met. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58705; File No. SR–Amex– 

2008–63)] 

Self-Regulatory Organizations; 

American Stock Exchange LLC; Order 

Granting Approval of Proposed Rule 

Change To Establish New Membership, 

Member Firm Conduct, and Equity 

Trading Rules Following the 

Exchange’s Acquisition by NYSE 

Euronext 

October 1, 2008. 

I. Introduction 

On July 28, 2008, the American Stock 

Exchange LLC (‘‘Amex’’ or the 

‘‘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 to 

establish new membership, member 

firm conduct, and equity trading rules 

following the Exchange’s acquisition by 

NYSE Euronext. The proposal was 

published for comment in the Federal 

Register on August 7, 2008.3 No 

comments were received on the 

proposal. This order approves the 

proposed rule change. 

II. Description of the Proposal 

A. Background 

As described in detail in a separate 

proposed rule change,4 NYSE Euronext 

intends to acquire Amex’s parent 

corporation, the Amex Membership 

Corporation, and restructure the 

Exchange’s ownership through a series 

of mergers (‘‘Mergers’’), following which 

Amex will be renamed NYSE Alternext 

U.S. LLC (‘‘NYSE Alternext’’). In a 

separate action today, the Commission 

approved that proposed rule change.5

In connection with the Mergers, Amex 

intends to relocate all equity trading 

currently conducted on its legacy 

facilities at 86 Trinity Place, New York, 

New York (the ‘‘86 Trinity Trading 

Systems’’) to 11 Wall Street, New York, 

New York (the ‘‘Equities Relocation’’). 

The Exchange’s equity trading facilities 

at 11 Wall Street (‘‘NYSE Alternext 

Trading Systems’’) will be operated by 

the New York Stock Exchange (‘‘NYSE’’) 

on behalf of the Exchange. At a later 

date, Amex will relocate all options 

trading currently conducted on the 86 

Trinity Trading Systems to new 

facilities at 11 Wall Street, which will 

be operated by NYSE Arca, Inc. (‘‘NYSE 

Arca’’) (the ‘‘Options Relocation,’’ and 

together with the Equities Relocation, 

the ‘‘Relocations’’). Before completion of 

the Relocations, all trading on the 86 

Trinity Trading Systems will continue 

to be governed by the existing Amex 

rules, as amended pursuant to the 

Mergers. The Exchange anticipates that 

the Equities Relocation will occur as 

soon as reasonably practicable following 

the date of the Mergers and that the 

Options Relocation will occur at or 

around February 2009. Upon 

completion of the Relocations, Amex 

will rescind its legacy rules. 

In this filing, Amex has proposed to 

adopt: (1) New membership rules, 

which are based closely on existing 

NYSE membership rules; (2) new 

member conduct rules, which are also 

based on existing NYSE member 

conduct rules; (3) new equity trading 

rules, to reflect the fact that equities 

trading on the Exchange will be 

supported by a new trading system 

based on NYSE’s existing system; and 

(4) certain transitional rules that explain 

which of the Exchange’s rules apply 

after the Mergers but before the 

Relocations are complete. The Exchange 

has stated that it will submit a separate 

filing to establish new options trading 

rules in anticipation of the Options 

Relocation. 

B. New Membership and Member Firm 

Conduct Rules 

The Exchange proposes to adopt rules 

governing member organizations that 

are closely modeled on the existing 

NYSE membership rules, including 

rules defining member and member 

organizations; 6 governing the admission 

of members, member organizations, 

allied members, and approved persons; 7

the formation and approval of member 

organizations; 8 changes within member 

organizations; 9 and submission of 

partnership articles and corporate 

documents. 10

The Exchange also proposes to adopt 

new member firm conduct rules, which 

govern the off-floor conduct of members 

and member organizations.11 These 

conduct rules relate to capital; 12

margin; 13 internal controls; 14 business 

conduct, customer protection, and 

account maintenance; 15

recordkeeping; 16 automated submission 

of trading data; 17 and financial 

statements and reporting.18 These rules 

are nearly identical to NYSE’s member 

firm conduct rules. In addition, many of 

these rules were adopted by the 

Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) in 2007 as 

‘‘Common Rules’’ pursuant to the 17d– 

2 Agreement between NYSE and 

FINRA.19

The Exchange proposes that, upon the 

effective date of this filing, each NYSE 

Alternext member organization will 

continue to be approved as an NYSE 

Alternext member organization,20 even 

if it does not meet all of the new 

membership requirements at that 

time.21 However, the new membership 

rules may impose different or additional 

requirements than the current Amex 

rules concerning membership, and 

following the Mergers an NYSE 

Alternext member or member 

organization holding an 86 Trinity 

Permit might not immediately satisfy 


jlentini on PROD1PC65 with NOTICES
58996 Federal Register / Vol. 73, No. 196 / Wednesday, October 8, 2008 / Notices 

22See Notice, 73 FR at 46078. 

23NYSE and FINRA have submitted separate 

filings concerning admission of Amex members. 

See Securities Exchange Act Release No. 58290 

(August 1, 2008), 73 FR 46676 (August 11, 2008) 

(SR–NYSE–2008–70); Securities Exchange Act 

Release No. 58291 (August 1, 2008), 73 FR 46661 

(August 11, 2008) (SR–FINRA–2008–043). 

24The Exchange has taken NYSE Rules 1–1004 in 

the form they existed as of July 18, 2008. The 

Exchange has stated that it will—as soon after the 

close of the Mergers as practicable, but not later 

than the date of the Equities Relocation— 

incorporate any changes to these rules made after 

July 18, 2008, but before the effective date of the 

Mergers. 

25See Securities Act Release No. 53539 (March 

22, 2006), 71 FR 16353 (March 31, 2006) (SR– 

NYSE–2004–05) (‘‘Hybrid Market Approval 

Order’’). 

26See proposed NYSE Alternext Equities Rule 

104.20. 

27The Exchange has stated that NYSE does not 

currently trade any securities pursuant to UTP. See 

Notice, 73 FR at 46076. 

28The Exchange has submitted additional filings 

addressing its rules and procedures for certain 

legacy disciplinary matters. See Securities 

Exchange Act Release No. 58286 (August 1, 2008), 

73 FR 46097 (August 7, 2008) (SR–Amex–2008–64). 

In addition, the Exchange intends to submit in the 

these new requirements. Therefore, the 

Exchange has proposed to give each 

such member a grace period of six 

months to comply with these new 

requirements beginning the date that it 

obtains an NYSE Alternext equities 

trading license in exchange for a valid 

86 Trinity Permit. The Exchange would 

revoke the member’s approval to trade 

if it failed to meet the new requirements 

by the close of the grace period, and 

reserve the right to commence 

proceedings to terminate its 

membership. 

The Exchange further proposes that 

each NYSE Alternext member be 

provided a grace period of six months 

within which to meet proposed NYSE 

Alternext Equities Rule 304A 

requirements to pass certain required 

examinations. This grace period would 

run from the date that the individual 

member transfers to the NYSE Alternext 

Trading Systems.22

The Exchange also has proposed to 

require all of its members to become 

members of both NYSE and FINRA.23

C. New Equity Trading Rules 

The Exchange has proposed a new 

rule set for equities trading (‘‘NYSE 

Alternext Equities Rules’’), which is 

closely modeled on NYSE Rules 1– 

1004.24 Because NYSE Alternext 

Trading Systems will be operated by 

NYSE on behalf of the Exchange, the 

NYSE Alternext Equities Rules will be 

substantially identical to the existing 

NYSE equity trading rules, with certain 

minor differences. The Exchange has 

represented that, following the Equities 

Relocation, the NYSE Alternext trading 

floor and the NYSE trading floor will be 

physically located in adjacent rooms at 

11 Wall Street and supported by the 

same systems and equipment. NYSE 

Alternext’s equity market structure will 

be identical to NYSE’s, as the two 

exchanges will have the same rules 

regarding, among other things, order 

interaction, priority and parity, 

specialist obligations, types of market 

participants, trading halts, and 

openings, closings, and re-openings. 

NYSE’s equity trading rules have 

previously been approved by the 

Commission.25

There are a few minor differences 

between the NYSE Alternext and NYSE 

trading rules. For example, rules related 

to Registered Competitive Market 

Makers, Competitive Traders, and 

Registered Options Representatives or 

Principals have not been adopted, since 

these categories of market participants 

will not exist on NYSE Alternext. 

Similarly, NYSE Alternext will be 

retaining the Amex’s specialist net 

capital requirements 26 reflecting NYSE 

Alternext’s trading of smaller 

capitalized stocks than NYSE. Also, 

because ETFs, bonds, and structured 

products will not trade on the NYSE 

Alternext trading systems, rules relating 

to these categories of securities have not 

been adopted. Finally, certain NYSE 

rules that are obsolete will not be 

adopted for the NYSE Alternext rule set. 

The Exchange does not intend to list 

any securities that are listed on NYSE or 

to trade any securities pursuant to 

unlisted trading privileges (‘‘UTP’’). The 

Exchange may in the future determine 

to trade securities listed on other 

exchanges on a UTP basis, subject to 

certain technical adjustments to the 

NYSE Alternext Trading Systems 

necessary to support such trading. 

However, the Exchange will not trade 

NYSE-listed securities on a UTP basis 

and will not trade pursuant to UTP any 

securities that might in the future be 

traded on the NYSE pursuant to UTP.27

The Exchange proposes to 

discontinue the listing and trading 

(including UTP trading) of exchangetraded funds (‘‘ETFs’’) and certain other 

structured products, including index 

and currency warrants. All listing and 

trading of such products would be 

transferred to NYSE Arca. The Exchange 

also proposes to discontinue trading of 

bonds currently listed on the Exchange, 

which could then trade on NYSE Bonds, 

a facility of NYSE. The Exchange has 

stated that the transfer of ETFs, bonds, 

and structured products will be 

accomplished as soon as practicable 

after the closing of the Mergers. Because 

movement of these listings might not be 

completed by the date of the Equities 

Relocation, such products would 

continue to be traded on the 86 Trinity 

Trading Systems until the transfer of the 

listings can be completed. If an issuer of 

an ETF, structured product, or bond 

does not wish to move its listing to 

NYSE Arca or NYSE Bonds, as the case 

may be, such issuer would have the 

opportunity to seek a listing on another 

market. 

Following the Equities Relocation, 

certain securities listed and traded on 

the Exchange would not be eligible to 

trade on NYSE Alternext because of a 

‘‘sub-penny trading condition’’ 

described in proposed NYSE Alternext 

Equities Rule 123D(3). Any such 

security would continue to be listed on 

the Exchange but subject to a nonregulatory trading halt. Trading in that 

security would be routed to NYSE Arca 

and handled in accordance with the 

rules governing that market. 

Because NYSE Alternext will operate 

on the same trading systems as NYSE, 

future market structure changes made to 

the NYSE system would also affect 

trading on NYSE Alternext. The 

Exchange has represented that, as 

changes made to the shared platform are 

implemented, both NYSE and NYSE 

Alternext will, as necessary, submit 

parallel proposed rule changes pursuant 

to Section 19(b)(1) of the Act. 

D. Transitional Rules 

The Exchange also proposes to amend 

the legacy Amex rules and include 

provisions in the new NYSE Alternext 

rules to clarify which rule set governs 

the conduct of trading following the 

Mergers. Proposed Amex Rule 0 

provides that all transactions conducted 

on or through the 86 Trinity Trading 

Systems would continue to be governed 

by the legacy rules of the Exchange, 

including Amex Rules 1–1605, the 

Amex Company Guide, and AEMI Rules 

1–1500 (collectively, the ‘‘86 Trinity 

Rules’’). Proposed NYSE Alternext 

Equities Rule 0 provides that all trading 

conducted on the NYSE Alternext 

Trading Systems following relocation to 

11 Wall Street would be governed by the 

NYSE Alternext Equities Rules, except 

to the extent any 86 Trinity Rules are 

specifically designated as applying. 

Proposed Amex Rule 0 and NYSE 

Alternext Equities Rule 0 also provide 

that proposed NYSE Alternext Equities 

Rules 475–477, which address 

disciplinary matters and are based on 

NYSE Rules 475–477, will apply to all 

NYSE Alternext members and member 

organizations and will govern trading on 

both the 86 Trinity and NYSE Alternext 

Trading Systems.28 Following 


jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 73, No. 196 / Wednesday, October 8, 2008 / Notices 58997 

near future a proposal to adopt Disciplinary Rule 

478T, which would govern the temporary 

disciplinary procedures applicable to certain legacy 

disciplinary proceedings. 

29 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

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

30 15 U.S.C. 78f(b)(5). 

31 15 U.S.C. 78f(b)(8). 

32See Hybrid Market Approval Order, supra note 

25. 

33 15 U.S.C. 78s(b)(2). 

34 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. 58408 

(August 22, 2008), 73 FR 50845. 

4 In approving this proposed rule change, the 

Commission notes that it has considered the 

proposed rule’s impact on efficiency, competition, 

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

5 15 U.S.C. 78f. 

6 15 U.S.C. 78f(b)(5). 

7 15 U.S.C. 78s(b)(2). 

8 17 CFR 200.30–3(a)(12). 

completion of the Options Relocation, 

the 86 Trinity Rules—including Amex 

Rule 0—would no longer be operative 

and would be rescinded by the 

Exchange. 

III. Discussion 

The Commission has carefully 

reviewed the proposed rule change and 

finds that it is consistent with the 

requirements of the Act and the rules 

and regulations thereunder applicable to 

a national securities exchange.29 In 

particular, the Commission finds that 

the proposed rule change is consistent 

with Section 6(b)(5) of the Act,30 which, 

among other things, requires that the 

rules of a national securities exchange 

be designed to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in regulating 

transactions in securities, 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 Commission also 

finds that the proposed rule change is 

consistent with Section 6(b)(8) of the 

Act,31 which requires that the rules of 

an exchange not impose any burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. The Commission 

notes that the proposed rules for the 

new NYSE Alternext market relating to 

membership, member firm conduct, and 

equities trading are substantially similar 

to existing NYSE rules, which have been 

previously subject to notice and 

comment and, where appropriate, 

approved by the Commission.32

This approval is based on the 

Commission’s understanding that the 

equity trading system of NYSE Alternext 

will not trade any securities that are 

traded on NYSE. If in the future NYSE 

Alternext wishes to trade any security 

that is also traded on NYSE, NYSE 

Alternext must first file with the 

Commission a proposed rule change 

pursuant to Section 19(b)(1) of the Act. 

All Amex members will, upon the 

closing of the Mergers, be approved as 

members of NYSE Alternext. However, 

since the new NYSE Alternext 

membership qualification rules are not 

identical to the current Amex rules, the 

Exchange has proposed a six-month 

grace period for members to meet the 

new requirements and for members to 

take any necessary examinations. The 

Commission believes this is a 

reasonable accommodation for existing 

members of the Exchange that meet the 

current membership requirements but 

which might not immediately be able to 

satisfy the new membership 

requirements. 

Finally, the Commission believes that 

the transitional rules proposed by the 

Exchange are consistent with the Act. 

They appear reasonably designed to 

promote an orderly transition by Amex 

members from the 86 Trinity Trading 

Systems to the NYSE Alternext Trading 

Systems. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,33 that the 

proposed rule change (SR–Amex–2008– 

63) be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.34

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–23766 Filed 10–7–08; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58687; File No. SR–BSE– 

2008–42] 

Self-Regulatory Organizations; Boston 

Stock Exchange, Inc.; Order Granting 

Approval of a Proposed Rule Change 

Relating to the Appointment of Market 

Makers on the Boston Options 

Exchange Facility 

September 30, 2008. 

On August 19, 2008, the Boston Stock 

Exchange, Inc. (‘‘BSE’’ or ‘‘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 to modify the rules of the Boston 

Options Exchange Group, LLC (‘‘BOX’’) 

to: (i) clarify that a Market Maker 

seeking to withdraw from a particular 

appointment will be required to provide 

BOX with at least three business days’ 

written notice of such withdrawal 

regardless of how long the Market 

Maker held such appointment, by 

removing conflicting language in BOX 

Rule 4(f) of Chapter VI that requires 

Market Makers to maintain active 

markets in all classes in which the 

Market Maker is appointed for a period 

of at least six months; and (ii) revise the 

formatting of Supplementary Material to 

Chapter VI, Section 5(c)(ii) of the BOX 

rules. 

The proposed rule change was 

published for comment in the Federal 

Register on August 28, 2008.3 The 

Commission received no comments on 

the proposal. 

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 4 and, in particular, the 

requirements of Section 6 of the Act 5

and the rules and regulations 

thereunder. Specifically, the 

Commission finds that the proposal is 

consistent with Section 6(b)(5) of the 

Act,6 in that the proposal is designed to 

promote just and equitable principles of 

trade and remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system. The Commission believes that 

the proposed rule change will eliminate 

ambiguity within BOX’s rules and 

provide greater clarity concerning 

Market Maker appointments and 

requests to withdraw from such 

appointments. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,7 that the 

proposed rule change (File No. SR– 

BSE–2008–42) be, and it hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–23759 Filed 10–7–08; 8:45 am] 

BILLING CODE 8011–01–P 


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