Federal Register / Vol. 74, No. 106 / Thursday, June 4, 2009 / Notices 26907 

12See supra note 4. 

13See Securities Exchange Act Release No. 59039 

(December 2, 2008), 73 FR 74770 (December 9, 

2008) (SR–NYSEArca–2006–21) (‘‘NYSE Arca 

Order’’). In the NYSE Arca Order, the Commission 

describes the competitive factors that apply to noncore market data products. The Commission hereby 

incorporates by reference the data and analysis from 

the NYSE Arca Order into this order. In addition, 

the Commission notes that it recently found that 

NYSE was subject to competitive forces when 

setting the terms of its NYSE OpenBook 

nonprofessional subscriber fee. See Securities 

Exchange Act Release No. 59544 (March 9, 2009), 

74 FR 11162 (March 16, 2009) (SR–NYSE–2008– 

131). 

14 15 U.S.C. 78s(b)(2). 

15 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. 

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

5 17 CFR 240.19b–4(f)(6). 

6See Securities Exchange Act Release No. 59383 

(February 11, 2009), 74 FR 7947 (February 20, 2009) 

(SR–NYSE–2009–07). 

7See Securities Exchange Act Release No. 58673 

(September 29, 2008), 73 FR 57707 (October 3, 

2008) (SR–NYSE–2008–60 and SR–Amex 2008–62) 

(approving the Merger). 

8 15 U.S.C. 78f. 

9See Securities Exchange Act Release No. 58705 

(October 1, 2008), 73 FR 58995 (October 8, 2008) 

(SR–Amex 2008–63) (approving the Equities 

Relocation). 

10See Securities Exchange Act Release No. 58705 

(October 1, 2008), 73 FR 58995 (October 8, 2008) 

(SR–Amex 2008–63) (approving the Equities 

Continued 

This proposal would make permanent 

the NYSE Realtime Reference Prices 

service and make permanent the 

$70,000 flat monthly fee for that 

service.12 The Commission has 

reviewed the proposal using the 

approach set forth in the NYSE Arca 

Order for non-core market data fees.13

There are a variety of alternative sources 

of information that impose significant 

competitive pressures on NYSE in 

setting the terms for distributing the 

NYSE Realtime Reference Prices service. 

The Commission believes that the 

availability of those alternatives, as well 

as NYSE’s compelling need to attract 

order flow, imposed significant 

competitive pressure on NYSE to act 

equitably, fairly, and reasonably in 

setting the terms of its proposal. 

Because NYSE was subject to 

significant competitive forces in setting 

the terms of the proposal, the 

Commission will approve the proposal 

in the absence of a substantial 

countervailing basis to find that its 

terms nevertheless fail to meet an 

applicable requirement of the Act or the 

rules thereunder. An analysis of the 

proposal does not provide such a basis. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,14 that the 

proposed rule change (SR–NYSE–2009– 

42), be, and it hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–13001 Filed 6–3–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60001; File No. SR– 

NYSEAmex–2009–21] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by NYSE 

Amex LLC Amending NYSE Amex 

Equities Rule 123E To Be More 

Consistent With the Exchange’s 

Current Designated Market Maker 

System 

May 29, 2009. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on May 22, 

2009, NYSE Amex LLC (the ‘‘Exchange’’ 

or ‘‘NYSE Amex’’) 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 Exchange. NYSE Amex filed the 

proposed rule change pursuant to 

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

19b–4(f)(6) thereunder,5 which renders 

it effective upon filing with the 

Commission. 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 

NYSE Amex Equities Rule 123E (‘‘DMM 

Combination Review Policy’’) to be 

more consistent with the Exchange’s 

current Designated Market Maker 

(‘‘DMM’’) system. The text of the 

proposed rule change is available at the 

Exchange, the Commission’s Public 

Reference Room, and http:// 

www.nyse.com. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

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

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

NYSE Amex Equities Rule 123E (‘‘DMM 

Combination Review Policy’’) to be 

more consistent with the Exchange’s 

current Designated Market Maker 

(‘‘DMM’’) system. These amendments 

are proposed to conform to amendments 

filed by the New York Stock Exchange 

LLC (‘‘NYSE’’).6

I. Background 

As described more fully in a related 

rule filing,7 NYSE Euronext acquired 

The Amex Membership Corporation 

(‘‘AMC’’) pursuant to an Agreement and 

Plan of Merger, dated January 17, 2008 

(the ‘‘Merger’’). In connection with the 

Merger, the Exchange’s predecessor, the 

American Stock Exchange LLC 

(‘‘Amex’’), a subsidiary of AMC, became 

a subsidiary of NYSE Euronext now 

called NYSE Amex LLC, and continues 

to operate as a national securities 

exchange registered under Section 6 of 

the Securities Exchange Act of 1934, as 

amended (the ‘‘Act’’).8 The effective 

date of the Merger was October 1, 2008. 

In connection with the Merger, on 

December 1, 2008, the Exchange 

relocated all equities trading conducted 

on the Exchange legacy trading systems 

and facilities located at 86 Trinity Place, 

New York, New York, to trading systems 

and facilities located at 11 Wall Street, 

New York, New York (the ‘‘Equities 

Relocation’’). The Exchange’s equity 

trading systems and facilities at 11 Wall 

Street (the ‘‘NYSE Amex Trading 

Systems’’) are operated by the NYSE on 

behalf of the Exchange.9

As part of the Equities Relocation, 

NYSE Amex adopted NYSE Rules 1– 

1004, subject to such changes as 

necessary to apply the Rules to the 

Exchange, as the NYSE Amex Equities 

Rules to govern trading on the NYSE 

Amex Trading Systems.10 The NYSE 

26908 Federal Register / Vol. 74, No. 106 / Thursday, June 4, 2009 / Notices 

Relocation); Securities Exchange Act Release No. 

58833 (October 22, 2008), 73 FR 64642 (October 30, 

2008) (SR–NYSE–2008–106) and Securities 

Exchange Act Release No. 58839 (October 23, 2008), 

73 FR 64645 (October 30, 2008) (SR–NYSEALTR– 

2008–03) (implementing the Bonds Relocation); 

Securities Exchange Act Release No. 59022 

(November 26, 2008), 73 FR 73683 (December 3, 

2008) (SR–NYSEALTR–2008–10) (adopting 

amendments to NYSE Amex Equities Rules to track 

changes to corresponding NYSE Rules); Securities 

Exchange Act Release No. 59027 (November 28, 

2008), 73 FR 73681 (December 3, 2008) (SR– 

NYSEALTR–2008–11) (adopting amendments to 

Rule 62—NYSE Amex Equities to track changes to 

corresponding NYSE Rule 62). 

11The initial rationale behind this additional 

requirement was to minimize the risk of financial 

and/or operational failure of larger specialist units. 

12The current provisions of NYSE Amex Equities 

Rule 123E(g)(4) will be deleted and not 

incorporated in the text of the proposed definition 

of ‘‘proposed combination.’’ NYSE Amex Equities 

Rule 123E(g)(4) includes as a definition of a DMM 

combination: ‘‘an individual DMM leaving an 

existing unit and proposing to take securities with 

him or her to join another existing unit.’’ Securities 

allocated on the Exchange are assigned to DMM 

units pursuant to NYSE Amex Equities Rule 103B 

with an individual employed by the unit assigned 

as the DMM. As such, the individual DMM on the 

NYSE [sic] is not permitted to take securities with 

him or her if the DMM becomes employed by 

another DMM unit. Accordingly, this concept is not 

being carried over into proposed NYSE Amex 

Equities Rule 123E. 

13See proposed NYSE Amex Equities Rule 

123E(c). 

Amex Equities Rules, which became 

operative on December 1, 2008, are 

substantially identical to the current 

NYSE Rules 1–1004 and the Exchange 

continues to update the NYSE Amex 

Equities Rules as necessary to conform 

with rule changes to corresponding 

NYSE Rules filed by the NYSE. 

II. NYSE Amex Equities Rule 123E 

Currently, pursuant to NYSE Amex 

Equities Rule 123E, the Exchange is 

responsible for reviewing proposed 

DMM unit combinations, subject to 

certain considerations, when the 

proposed DMM unit combination would 

result in an aggregate of more than five 

percent (‘‘Tier 1 combination’’), 10 

percent (‘‘Tier 2 combination’’) or 15 

percent or more (‘‘Tier 3 combination’’) 

in any one of four concentration 

measures: (1) Common stocks listed on 

the Exchange; (2) the 250 most active 

listed common stocks; (3) the total 

trading volume of common stock listed 

on the Exchange; and (4) the total dollar 

value of common stock listed on the 

Exchange. 

Where a proposed combination 

involves or would result in a DMM unit 

accounting for more than five percent of 

any of the ‘‘concentration measures,’’ 

the Exchange is required to review the 

proposed combination to take into 

consideration: 

(1) The effects of the proposed 

combination in terms of the following 

criteria: 

(a) Strengthening the capital base of 

the resulting DMM unit; 

(b) minimizing both the potential for 

financial failure and the negative 

consequences of any such failure on the 

DMM system as a whole; and 

(c) maintaining or increasing 

operational efficiencies; 

(2) commitment to the Exchange 

market, focusing on whether the 

constituent DMM units have worked to 

support, strengthen and advance the 

Exchange, its agency/auction market 

and its competitiveness in relation to 

other markets; and 

(3) the effect of the proposed 

combination on overall concentration of 

DMM units. 

Where a DMM unit currently exceeds 

five percent of any concentration 

measure, and then proposes a 

combination that would not result in 

increasing its concentration measure by 

more than two percentage points, or not 

result in the combined unit moving into 

a higher tier classification, the Exchange 

shall not review the proposed 

combination. 

When a proposed combination has a 

concentration percentage of 10% or 

higher in any of the four measures set 

forth above, NYSE Amex Equities Rule 

123E(c)(1)(a)(i)-(iv) requires the 

combined entity to prove by a 

preponderance of the evidence that the 

proposed combination: (1) Would not 

create or foster concentration in the 

DMM business detrimental to the 

Exchange and its markets; (2) would 

foster competition among DMM units; 

(3) would enhance the performance of 

the constituent DMM unit and the 

quality of market of stocks involved; 

and (4) would demonstrate that, if 

approved, the proposed combination is 

otherwise in the public interest. 

Moreover, pursuant to NYSE Amex 

Equities Rule 123E(d), proposed 

combinations that would result in the 

DMM units accounting for more than 

10% of a concentration measure require 

the proponents of the combination to 

submit an operational certification 

prepared by an independent, nationally 

recognized management consulting 

organization with respect to all aspects 

of the unit’s management and 

operations.11 The proponents must also 

submit an acceptable risk management 

plan with respect to any line of business 

in which they engage. 

If the proposed combination has a 

concentration percentage greater than 

15%, NYSE Amex Equities Rule 

123E(c)(1)(b)(i)–(iv) further requires the 

combined entity to prove that the 

measures set forth for combination of 

10% are satisfied by clear and 

convincing evidence. 

III. Proposed Amendments to NYSE 

Amex Equities Rule 123E 

The Exchange proposes to amend the 

DMM Combination review to more 

clearly define what constitutes a DMM 

Combination that requires review and 

approval by the Exchange. The 

Exchange further seeks to clarify the 

administrative process associated with 

that review. 

The Exchange proposes to amend 

NYSE Amex Equities Rule 123E to 

eliminate the current ‘‘Tier’’ system as 

the mechanism for determining the 

nature of the review for a proposed 

DMM combination. Today, there are 

four DMM units approved to operate on 

the Exchange; as such, any proposed 

combination has the potential to have 

significant impact on the Exchange’s 

ability to maintain its DMM system and 

to provide a fair and orderly market 

place. Accordingly, the Exchange 

proposes to eliminate threshold 

concentration levels as the instigating 

factor for the Exchange to review a 

proposed DMM combination. Pursuant 

to proposed NYSE Amex Equities Rule 

123E(a), any ‘‘proposed combination’’ 

must be approved by the Exchange. 

Proposed NYSE Amex Equities Rule 

123E(b) defines a ‘‘proposed 

combination’’ to include changes to the 

current DMM unit business that has the 

potential to have a significant impact on 

the Exchange’s market. As such, the 

Exchange will review when: (1) Two or 

more DMM units merge or otherwise 

combine their businesses with the result 

that the total number of existing DMM 

units will be reduced; (2) two or more 

DMM units combine their businesses 

with the result that the existing number 

of DMM units is not reduced, but one 

or more of the surviving units is 

substantially reduced in size; or (3) a 

DMM unit merges or otherwise 

combines with a non-DMM business 

resulting in a change of control of the 

existing DMM unit.12

The current rule does not specify 

where the correspondence regarding a 

proposed combination should be 

directed. Through this amendment, the 

Exchange would require the proponents 

of a proposed combination to direct the 

correspondence to the Office of the 

Corporate Secretary.13 This department 

will be able to coordinate and facilitate 

the timely review of the request. 

Similar to the current rule, the written 

submission should address all of the 

factors for review as well as: (1) 

Performance in any securities received 

through previous combinations or 

transfers of registrations during the 

Federal Register / Vol. 74, No. 106 / Thursday, June 4, 2009 / Notices 26909 

14 Id. 

15On July 30, 2007, NASD and NYSE Regulation, 

Inc. consolidated their member firm regulation 

operations into a combined organization, FINRA. 

Pursuant to Rule 17d–2 under the Securities 

Exchange Act of 1934, as amended (the ‘‘Exchange 

Act’’), NYSE, NYSE Regulation, Inc., and NASD 

entered into an agreement (the ‘‘Agreement’’) to 

reduce regulatory duplication for firms that are 

members of FINRA and also members of NYSE on 

or after July 30, 2007 (‘‘Dual Members’’), by 

allocating to FINRA certain regulatory 

responsibilities for selected NYSE rules. The 

Agreement includes a list of all of those NYSE rules 

for which FINRA has assumed regulatory 

responsibilities (‘‘Common Rules’’). NYSE and 

NYSE Amex entered into a regulatory contract 

under which NYSE Regulation performs regulatory 

functions on behalf of NYSE Amex. Some of those 

contracted regulatory functions will be performed 

by FINRA, pursuant to the Multi-Party RSA. 

Pursuant to NYSE Rule 2, approved member 

organizations of NYSE Amex are approved as NYSE 

member organizations. Likewise, NYSE Amex 

Equities Rule 2 provides that approved NYSE 

member organizations are approved NYSE Amex 

member organizations. Both NYSE and NYSE Amex 

Equities Rule 2(b) define a member organization as 

a registered broker or dealer that is a member of 

FINRA and approved by its respective Exchange as 

a member organization. 

16See, e.g., NYSE, NYSE Amex Equities and 

FINRA Rules 104, 311, 325–328, 382, and 418. 

17NYSE Amex Equities Rule 98 is not intended 

to assess the fitness of a DMM unit; rather, it 

assesses whether the DMM unit is properly walled 

off from approved persons or a parent member 

organization. If a DMM unit is a stand-alone 

business without any affiliates, approved persons, 

or parent company, NYSE Amex Equities Rule 98 

is inapplicable. Currently, two of the four NYSE 

Amex DMM units are stand-alone firms and 

therefore not subject to NYSE Amex Equities Rule 

98. 

18NYSE Amex Equities Rule 103.20(a)(x). 

preceding two years; (2) whether the 

resulting DMM unit will maintain 

staffing adequate to the needs of the 

market place; (3) whether the proposed 

combined unit will have a real-time 

surveillance system that monitors DMM 

trading and uses exception alerts to 

detect unusual trades or trading 

patterns; (4) whether the proposed 

combined unit will have disaster 

recovery facilities for its computer 

network and software; (5) whether it has 

designated specific individuals to 

handle unusual situations on the Floor 

(if so, the names of the individuals); (6) 

whether the combined unit will employ 

a ‘‘zone’’ or other management system 

on the Floor (with identification of the 

names of the individuals and their 

specific responsibilities, as applicable); 

and (7) whether the combined unit will 

designate a senior staff member to be 

responsible for reviewing DMM 

performance data, with specific 

procedures for correcting any 

deficiencies identified.14

The Exchange further proposes to 

rescind the requirement to submit an 

operational certification prepared by an 

independent, nationally recognized 

management consulting organization 

with respect to all aspects of the firm’s 

management and operations for 

proposed combinations as it related to 

proposed combinations of 10% or 

higher, as required by NYSE Amex 

Equities Rule 123E(d). 

The Exchange believes that the 

management and operational concerns 

contemplated by this requirement do 

not exist today. Specifically, the 

Exchange submits that its current rules 

already address and monitor the 

management and operational 

requirements originally contemplated 

by the performance of an independent 

consultant and therefore, such outside 

certification is duplicative and 

unnecessary. 

As a result of the New Multi-Party 

Regulatory Services Agreement (‘‘MultiParty RSA’’) signed by FINRA, NYSE 

and NYSE Amex on October 1, 2008, 

FINRA oversees NYSE and NYSE Amex 

Member Firm Regulation and carefully 

reviews organizations seeking 

membership with FINRA, NYSE and 

NYSE Amex.15 All prospective member 

organizations are required to comply 

with the Securities and Exchange Act of 

1934 as well as its rules with regard to 

the creation and preservation of books 

and records, the corporate structure of 

the proposed member organization, the 

supervision and control, and the net 

capital requirements of the proposed 

member organization. Furthermore, 

these rules require annual audits of the 

member organization’s financial 

statements by an independent public 

account and the submission of an 

audited financial and operational report 

to the respective Exchanges.16

The structure and regulatory concerns 

that accompany applications for 

membership on the Exchange in today’s 

market have been carefully considered 

and addressed in the FINRA and NYSE 

Consolidated Rules. These Rules create 

a multi-tiered level of review to ensure 

that requirements related to appropriate 

managerial and financial capabilities for 

DMM units are in place from the onset 

of membership with the Exchange to the 

approval of members as DMMs. 

For example, NYSE Amex Equities 

Rules 98, 103, and 104 set forth various 

criteria required for the operation, 

management and responsibilities of a 

DMM unit on the Exchange. 

There are currently two versions of 

NYSE Amex Equities Rule 98 in the 

NYSE Amex Equities Rulebook. In 

either form, NYSE Amex Equities Rule 

98 governs the relationship between a 

DMM unit and its approved persons 

(both versions of NYSE Amex Equities 

Rule 98) or the other departments, 

divisions or aggregation units of the 

member organization that operate an 

NYSE Amex DMM unit (Current NYSE 

Amex Equities Rule 98). NYSE Amex 

Equities Rule 98 Former applies to those 

DMM member organizations and 

associated approved persons that were 

approved before October 1, 2008 for an 

exemption under Amex Rule 193, which 

was the Amex analog to NYSE Amex 

Equities Rule 98. 

When an NYSE Amex DMM unit 

either operates within a larger member 

organization with other business units 

or has approved persons, NYSE Amex 

Equities Rule 98 provides additional 

regulatory authority for NYSE 

Regulation, Inc. and FINRA to review 

the structure of a member organization’s 

information barriers between the DMM 

unit and the rest of the member 

organization. Additionally, NYSE Amex 

Equities Rule 98 requires that these 

DMM units maintain the necessary net 

capital requirements in compliance with 

NYSE Amex Equities Rule 103.20, 

separate and apart from the rest of the 

member organization.17

NYSE Amex Equities Rule 103 sets 

forth the criteria that an Exchange 

member must satisfy in order to apply 

as a DMM unit. As part of the approval 

process, the Exchange reviews the 

member organization’s market making 

ability and the capital available for 

market making. NYSE Amex Equities 

Rule 103.20 imposes stringent net 

capital requirements for all DMM units 

and requires the DMM unit to 

immediately notify FINRA, on behalf of 

NYSE Regulation, if it is unable to 

comply with these prescribed 

requirements. DMM units that 

anticipate falling below the warning 

level of its tentative capital 

requirements must notify the Exchange, 

which will work closely with the DMM 

unit in order to develop a written plan 

to assist the DMM unit in meeting its 

capital requirement.18 Thereafter, 

compliance with the established plan is 

monitored by the Exchange and FINRA. 

These net capital requirements apply to 

all DMM units whether these units are 

stand-alone businesses or part of a larger 

member organization. 

NYSE Amex Equities Rule 104 sets 

forth the dealings and responsibilities of 

DMMs and requires the DMM units to 

maintain compliance at all times with 

NYSE [sic] and SEC regulations. NYSE 

Regulation’s Division of Market 

Surveillance and FINRA reviews assess 

whether DMM units are complying with 

their obligations as DMMs. 

Once approved as a DMM unit, 

FINRA and NYSE Regulation continue 

to monitor for compliance with these 

rules. FINRA reviews a DMM unit’s 

26910 Federal Register / Vol. 74, No. 106 / Thursday, June 4, 2009 / Notices 

19The NYSE established an allocation system 

based on a single objective measure to determine a 

DMM unit’s eligibility to participate in the 

allocation process. See Securities Exchange Release 

No. 58363 (August 14, 2008), 73 FR 49514 (August 

21, 2008) (SR–NYSE–2008–52). NYSE Amex 

adopted this allocation policy pursuant to the 

Equities Relocation. 

20 In addition, the Exchange seeks to eliminate 

references to certain legacy programs that were 

operated by the NYSE that no longer exist. 

Specifically, NYSE Amex Equities Rule 123E, 

Supplementary Material .10(a) refers to 

participation in a ‘‘FACTS’’ program. 

21See Proposed NYSE Amex Equities Rule 

123E(f). 22 15 U.S.C. 78f(b)(5). 

compliance with net capital 

requirements on a daily basis and 

examines DMM units on an annual basis 

for compliance with Exchange rules. 

The Exchange submits that the FINRA 

and NYSE [sic] rules applicable to 

DMMs, combined with the FINRA exam 

program, provide for appropriate 

monitoring and review of organizations 

seeking initial membership to the 

Exchange and the ability to operate as 

a DMM on the Exchange on an ongoing 

basis. This regulatory structure obviates 

the need for an independent consultant 

to perform a review of a proposed 

combination’s management and 

operational efficiencies. The Exchange 

therefore believes that the requirement 

for an independent, nationally 

recognized management consulting 

organization review with respect to all 

aspects of the proposed combined 

entity’s management and operations is 

no longer warranted. 

The Exchange further seeks to make 

the criteria for the Exchange’s review of 

a proposed combination consistent with 

the requirements for operating a DMM 

unit. Under the proposed rule change, 

the Exchange will review whether the 

proposed combined entity will be able 

to comply with the provisions of NYSE 

Amex Equities Rule 103B, Section II 19

which sets forth the process of 

allocating securities to the DMM units. 

The Exchange will further review the 

proposed combination to determine 

whether that proposed combination can 

comply with the provisions of NYSE 

Amex Equities Rules 98, 103 and 104 

which set forth the requirements for the 

operation of a DMM unit. Additionally, 

the Exchange proposes to retain the 

criteria set forth in the current process 

and include as part of its review: (1) 

Whether the proposed combination 

minimizes both the potential for 

financial failure and the negative 

consequences of any such failure on the 

DMM system as a whole; (2) whether 

the proposed combination maintains or 

increases operational efficiencies; (3) 

the surviving DMM unit’s commitment 

to the Exchange’s market; and (4) the 

effect of the proposed combination on 

overall concentration of DMM units.20

The Exchange’s ultimate 

determination to approve or disapprove 

a proposed combination will be based 

upon a determination that the proposed 

combination has satisfied the criteria set 

forth in proposed NYSE Amex Equities 

Rule 123E(d)(1)–(5) and the Exchange 

determines that the proposed 

combination would: (1) Not create or 

foster concentration in the DMM 

business detrimental to the Exchange 

and its markets; (2) foster competition 

among DMM units; and (3) enhance the 

performance of the constituent DMM 

unit and the quality of the markets in 

the securities involved.21 The Exchange 

may condition its approval upon 

compliance by the resulting DMM unit 

with any steps the Exchange may 

specify to address any concerns it may 

have in regard to considerations of the 

above criteria. 

To ensure the fairness of the new 

process, pursuant to proposed NYSE 

Amex Equities Rule 123E(f), the 

Exchange must approve or disapprove a 

proposed combination within ten (10) 

business days of the written submission. 

The Exchange reserves the right to 

extend its review process if the 

information submitted by the 

proponents of the DMM combination is 

inadequate or requires additional time 

to review in order for the Exchange to 

reach a decision. 

In any instance where the Exchange 

does not approve a proposed 

combination, the proponents of such 

proposed combination have a right to 

have such decision reviewed by the 

Exchange’s Board of Directors. 

Conclusion 

The Exchange believes that the 

proposed modifications to the 

Exchange’s current administrative 

procedures relating to the review of a 

proposed DMM combination reflect the 

current operational structure of DMM 

systems on the Exchange. These 

proposed modifications also clarify 

what constitutes a proposed 

combination and amends the criteria 

used to review the proposed 

combination. Moreover, by establishing 

a deadline for the completion of the 

review and a right to appeal to the 

Exchange Board of Directors, NYSE 

Amex believes that its process will be 

fair and allow member organizations to 

properly manage their business 

initiatives. 

Finally, the Exchange notes that these 

proposed amendments would conform 

the DMM Combination Policy of NYSE 

Amex Equities Rule 123E to the DMM 

Combination Policy of its affiliated 

exchange, the New York Stock Exchange 

LLC. 

2. Statutory Basis 

The basis under the Act for the 

proposed rule change is the requirement 

under Section 6(b)(5),22 which requires 

that an exchange have rules that are 

designed to foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating 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 proposed rule 

change is consistent with these 

objectives in that it enables the 

Exchange to further enhance the process 

by which it reviews proposed 

combinations of DMM units. Through 

the instant filing to make its internal 

administrative process related to the 

Exchange review of a proposed DMM 

combination consistent with the 

underlying requirements for DMMs and 

maintaining criteria that fosters the 

DMM system, the Exchange believes 

that it is facilitating transactions. 

Specifically, the Exchange believes 

that the proposed changes to the DMM 

combination review process are 

necessary to facilitate the continuation 

of its DMM system which allows the 

Exchange to provide its market 

participants with a market maker that is 

responsible for: (i) Providing liquidity to 

the market when there is a recognized 

need for additional liquidity; (ii) 

bridging the gap between supply/ 

demand by purchasing when no one 

else is buying or selling when no one 

else is selling; and (iii) overall 

maintaining a fair and orderly market, 

that ultimately removes impediments to 

and perfects the mechanism of a free 

and open market and a national market 

system and, in general, protects 

investors and the public interest. 

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. 

Federal Register / Vol. 74, No. 106 / Thursday, June 4, 2009 / Notices 26911 

23 15 U.S.C. 78s(b)(3)(A). 

24 17 CFR 240.19b–4(f)(6). 

25 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. The 

Exchange has satisfied this requirement. 

26For 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). 

27 15 U.S.C. 78s(b)(3)(C). 28 17 CFR 200.30–3(a)(12). 

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: (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, the proposed rule 

change has become effective pursuant to 

Section 19(b)(3)(A) of the Act 23 and 

Rule 19b–4(f)(6) thereunder.24

A proposed rule change filed under 

Rule 19b–4(f)(6) normally does not 

become operative for 30 days after the 

date of filing.25 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 requested that the 

Commission waive the 30-day operative 

delay and designate the proposed rule 

change operative upon filing. 

The Exchange believes that the instant 

filing is non-controversial because the 

proposed amendments remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system by 

creating systems and procedures for the 

Exchange to efficiently evaluate and 

approve proposed DMM combinations 

in light of the evolving market system. 

The Commission notes that these 

proposed amendments would conform 

the DMM Combination Review Policy of 

NYSE Amex Equities Rule 123E to the 

DMM Combination Review Policy of its 

affiliated exchange, NYSE. 

The Exchange believes that good 

cause exists to justify waiver of the 30- 

day operative delay in order to 

immediately eliminate the disparity 

between NYSE’s and NYSEAmex’s 

DMM Combination Review Policies and 

to immediately allow the Exchange to 

implement procedures for reviewing 

proposed mergers, acquisitions and 

other combinations between or among 

DMM units that are appropriate in the 

current marketplace. The proposed rule 

changes update the combination review 

policy that was created in 1994, for the 

NYSE market structure, which did not 

adequately contemplate the conditions 

of today’s market. 

Additionally, the Exchange believes 

that good cause exists to justify waiver 

of the 30-day operative delay in order to 

avoid potential delays in proposed 

DMM combinations that would support, 

strengthen, and advance the Exchange 

and its market, and would ultimately 

benefit its investors and the public 

interest. The Exchange believes that this 

proposed rule change provides 

guidelines to proposed combinations 

and ensures that these proposed 

combinations do not foster business 

detrimental to the Exchange, but also 

enhances the performance of the DMM 

unit and the quality of markets. By 

doing so, the Exchange believes, this 

proposed rule change ultimately 

protects the customers and the public 

interest and should be immediately 

effective in order to promote investor 

protection. 

In light of the forgoing, the 

Commission believes that waiving the 

30-day operative delay is consistent 

with the protection of investors and the 

public interest. Therefore, the 

Commission designates the proposal 

operative upon filing.26

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.27

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–NYSEAmex–2009–21 on 

the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NYSEAmex–2009–21. 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 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– 

NYSEAmex–2009–21 and should be 

submitted on or before June 25, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.28

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–13000 Filed 6–3–09; 8:45 am] 

BILLING CODE 8010–01–P