30334 Federal Register / Vol. 74, No. 121 / Thursday, June 25, 2009 / Notices 

1See Securities Exchange Act Release No. 59135 

(December 22, 2008), 73 FR 79954 (December 30, 

2008) (order approving File No. SR–ISE–2008–85). 

2 15 U.S.C. 78c(a)(2). 

3Under Section 3(a)(2) of the Act, the term 

‘‘facility,’’ when used with respect to an exchange, 

includes ‘‘its premises, tangible or intangible 

property whether on the premises or not, any right 

to the use of such premises or property or any 

service thereof for the purpose of effecting or 

reporting a transaction on an exchange (including, 

among other things, any system of communication 

to or from the exchange, by ticker or otherwise, 

maintained by or with the consent of the exchange), 

and any right of the exchange to the use of any 

property or service.’’ 

4See Securities Exchange Act Release No. 59133 

(December 22, 2008), 73 FR 79940 (December 30, 

2008) (‘‘Exemption Order’’). 

5 17 CFR 240.0–12. 

6 15 U.S.C. 78mm(a)(1). 

7See letter from Michael J. Simon, General 

Counsel and Secretary, ISE, to Elizabeth M. 

Murphy, Secretary, Commission, dated June 15, 

2009 (‘‘Exemption Request’’). 

8See Section 3(a)(2) of the Exchange Act, 15 

U.S.C. 78c3(a)(2) (definition of ‘‘facility’’). 

Interested persons may submit 

comments on whether the instant 

contract is consistent with the policies 

of 39 U.S.C. 3632, 3633, or 3642 and 39 

CFR part 3015 and 39 CFR 3020, subpart 

B, and whether it should be classified 

within the Priority Mail Contract Group 

or as a separate product. Comments in 

this case are due no later than June 26, 

2009. 

The public portions of these filings 

can be accessed via the Commission’s 

Web site (http://www.prc.gov). 

The Commission appoints Paul L. 

Harrington to serve as Public 

Representative in this docket. 

III. Supplementary Information 

Pursuant to 39 CFR 3015.6, the 

Commission requests the Postal Service 

to provide the following supplemental 

information by June 23, 2009: 

1. (a) Please explain the cost 

adjustments made to each contract; 

(b) Explain the mailer activities or 

characteristics that: 

(i) Yield cost savings to the Postal 

Service, 

(ii) Impose additional costs on the 

Postal Service; 

(c) Please address every instance 

where an NSA partner’s cost differs 

from the average cost. 

2. (a) Please provide a timeframe of 

when NSA partner volumes and cubic 

feet measurements were collected for 

each contract. 

(b) Please provide a unit of analysis 

for volumes in each contract, e.g., whole 

numbers, thousands, etc. 

3. In the Excel files accompanying the 

instant contract, unit transportation 

costs are hard coded (See tab: ‘‘Partner 

Unit Cost’’ rows 18 and 19). Please 

provide up-to-date sources and show all 

calculations. 

IV. Ordering Paragraphs 

It is Ordered: 

1. The Commission establishes Docket 

No. CP2009–38 for consideration of the 

issues raised in this docket. 

2. As discussed in this order, the 

Postal Service shall file supplemental 

information, if necessary, within three 

days of the Commission’s order in 

Docket No. MC2009–25 addressing the 

scope of the proposed Priority Mail 

Contract Group product. 

3. Comments by interested persons in 

these proceedings are due no later than 

June 26, 2009. 

4. The Postal Service is to provide the 

information requested in section III of 

this order no later than June 23, 2009. 

5. Pursuant to 39 U.S.C. 505, Paul L. 

Harrington is appointed to serve as 

officer of the Commission (Public 

Representative) to represent the 

interests of the general public in these 

proceedings. 

6. The Secretary shall arrange for 

publication of this order in the Federal 

Register. 

By the Commission. 

Steven W. Williams, 

Secretary. 

[FR Doc. E9–14926 Filed 6–24–09; 8:45 am] 

BILLING CODE 7710–FW–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60152] 

Order Granting Application for 

Extension of a Temporary Conditional 

Exemption Pursuant to Section 36(a) of 

the Exchange Act by the International 

Securities Exchange, LLC Relating to 

the Ownership Interest of International 

Securities Exchange Holdings, Inc. in 

an Electronic Communications 

Network 

June 19, 2009. 

I. Introduction 

On December 22, 2008, the Securities 

and Exchange Commission 

(‘‘Commission’’) approved a proposal 

filed by the International Securities 

Exchange, LLC (‘‘ISE’’ or ‘‘Exchange’’) in 

connection with corporate transactions 

(the ‘‘Transactions’’) in which, among 

other things, the parent company of ISE, 

International Securities Exchange 

Holdings, Inc. (‘‘ISE Holdings’’), 

purchased a 31.54% ownership interest 

in Direct Edge Holdings LLC (‘‘Direct 

Edge’’), the owner and operator of Direct 

Edge ECN (‘‘DECN’’), a registered 

broker-dealer and electronic 

communications network (‘‘ECN’’).1

Following the closing of the 

Transactions (the ‘‘Closing’’), Direct 

Edge’s wholly-owned subsidiary, Maple 

Merger Sub LLC (‘‘Merger Sub’’) began 

to operate a marketplace for the trading 

of U.S. cash equity securities by Equity 

Electronic Access Members of ISE (the 

‘‘Facility’’), under ISE’s rules and as a 

‘‘facility,’’ as defined in Section 3(a)(2) 

of the Securities Exchange Act of 1934 

(‘‘Exchange Act’’),2 of ISE.3

DECN, which operates as an ECN and 

submits its limit orders to the Facility 

for display and execution, is an affiliate 

of ISE through ISE Holdings’ equity 

interest in DE Holdings. DECN also is a 

facility, as defined in Section 3(a)(2) of 

the Exchange Act, of ISE because it is an 

affiliate of ISE used for the purpose of 

effecting and reporting securities 

transactions. Because DECN is a facility 

of ISE, ISE, absent exemptive relief, 

would be obligated under Section 19(b) 

of the Exchange Act to file with the 

Commission proposed rules governing 

the operation of DECN’s systems and 

subscriber fees. 

On December 22, 2008, the 

Commission exercised its authority 

under Section 36 of the Exchange Act to 

grant ISE a temporary exemption, 

subject to certain conditions, from the 

requirements under Section 19(b) of the 

Exchange Act with respect to DECN’s 

proposed rules.4

On June 15, 2009, ISE filed with the 

Commission, pursuant to Rule 0–12 5

under the Exchange Act, an application 

under Section 36(a)(1) of the Exchange 

Act 6 to extend the relief granted in the 

Exemption Order for an additional 180 

days, subject to certain conditions.7

This order grants ISE’s request for a 

temporary extension of the relief 

provided in the Exemption Order, 

subject to the satisfaction of certain 

conditions, which are outlined below. 

II. Application for an Extension of the 

Temporary Conditional Exemption 

From the Section 19(b) Rule Filing 

Requirements 

On June 15, 2009, ISE requested that 

the Commission exercise its authority 

under Section 36 of the Exchange Act to 

temporarily extend, subject to certain 

conditions, the temporary conditional 

exemption granted in the Exemption 

Order from the rule filing procedures of 

Section 19(b) of the Exchange Act in 

connection with ISE Holdings’ equity 

ownership interest in DE Holdings and 

the continued operation of DECN as a 

facility of ISE.8

The Exemption Request notes that on 

May 7, 2009, EDGA Exchange, Inc., and 

EDGX Exchange, Inc. (together, the 


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9See Exemption Request at 2. 

10 Id. 

11 Id. 

12 Id. 

13 Id. 

14 Id. 

15According to ISE, it would be impracticable for 

DECN to display its limit orders other than on the 

Facility. See Exemption Request at 3. 

16See Exemption Request at 2. 

17 Id. 

18See Exemption Request at 2–3. 

19The ISE also represents that it has complied 

with the conditions in the Exemption Order and 

that it will continue to comply with these 

conditions during any extension of the relief 

granted in the Exemption Order. See Exemption 

Request at 3. 

20See Exemption Request at note 5. 

21See Exemption Request at note 4. 

22 15 U.S.C. 78mm(a). Section 36 of the Exchange 

Act was enacted as part of the National Securities 

Markets Improvements Act 1996, Pub. L. No. 104– 

290 (‘‘NSMIA’’). 

23 15 U.S.C. 78mm(a)(1). 

24H.R. Rep. No. 104–622, 104th Cong., 2d Sess. 

38 (1996). 

25S. Rep. No. 104–293, 104th Cong., 2d Sess. 15 

(1996). 

26See Exemption Order, supra note 4. 

27See Securities Exchange Act Release No. 50311 

(September 3, 2004), 69 FR 54818 (September 10, 

2004). 

28 15 U.S.C. 78s(b)(3)(A). 

‘‘Exchange Subsidiaries’’), two whollyowned subsidiaries of DE Holdings, 

filed with the Commission Form 1 

applications (the ‘‘Form 1 

Applications’’) to register as national 

securities exchanges under Section 6 of 

the Exchange Act.9 According to the 

Exemption Request, DECN intends to 

file a ‘‘Cessation of Operations Report’’ 

with the Commission and to cease 

operations as an ECN shortly following 

any Commission approval of the Form 

1 Applications and the Exchange 

Subsidiaries commencing operations as 

national securities exchanges.10

Because DECN will cease operations 

as an ECN if the Commission approves 

the Form 1 Applications, ISE expects 

that DECN will continue to operate as a 

facility of ISE for a relatively brief 

period.11 In addition, ISE believes that 

it would be unduly burdensome and 

inefficient to require DECN’s operating 

rules to be separately subject to the 

Section 19(b) rule filing process because 

DECN is only operating temporarily as 

a facility of ISE while the Commission 

considers the Form 1 Applications.12

ISE notes, further, that the Commission 

is reviewing the rules governing the 

operation of the Exchange Subsidiaries 

as part of its review of the Form 1 

Applications.13

ISE has asked the Commission to 

exercise its authority under Section 36 

of the Exchange Act to grant ISE a 180- 

day extension of the Exemption Order’s 

relief, subject to certain conditions, from 

the Section 19(b) rule filing 

requirements that otherwise would 

apply to DECN as a facility of ISE.14 The 

extended temporary conditional 

exemption would commence 

immediately and would permit the 

continued operation of DECN while the 

Commission considers the Form 1 

Applications that, if approved, would 

allow the Exchange Subsidiaries to 

operate in place of DECN.15 ISE believes 

that the extended temporary conditional 

exemption will help to ensure an 

orderly transition from DECN to the 

proposed Exchange Subsidiaries.16

ISE states, in addition, that the 

extended exemption will not diminish 

the Commission’s ability to monitor ISE 

and DECN.17 In this regard, ISE notes 

that to the extent that ISE makes 

changes to its systems, including the 

Facility, during the extended temporary 

exemption period, or thereafter, it 

remains subject to Section 19(b) and 

thus obligated to file proposed rule 

changes with the Commission.18

Further, in the Exemption Request, ISE 

commits to satisfying certain conditions, 

as outlined below, which are identical 

to the conditions in the Exemption 

Order.19 For example, as a condition to 

the extended temporary exemption, ISE 

will be required to submit proposed rule 

changes with respect to any material 

changes to DECN’s functions during the 

exemption period.20 ISE notes, however, 

that neither ISE nor DECN anticipates 

any material changes to DECN’s 

functionality during the extended 

temporary exemption period.21

III. Order Granting Extension of 

Temporary Conditional Section 36 

Exemption 

In 1996, Congress gave the 

Commission greater flexibility to 

regulate trading systems, such as DECN, 

by granting the Commission broad 

authority to exempt any person from 

any of the provisions of the Exchange 

Act and to impose appropriate 

conditions on their operation.22

Specifically, NSMIA added Section 

36(a)(1) to the Exchange Act, which 

provides that ‘‘the Commission, by rule, 

regulation, or order, may conditionally 

or unconditionally exempt any person, 

security, or transaction, or any class or 

classes of persons, securities, or 

transactions, from any provision or 

provisions of [the Exchange Act] or of 

any rule or regulation thereunder, to the 

extent that such exemption is necessary 

or appropriate in the public interest, 

and is consistent with the protection of 

investors.’’ 23 In enacting Section 36, 

Congress indicated that it expected that 

‘‘the Commission will use this authority 

to promote efficiency, competition and 

capital formation.’’ 24 It particularly 

intended to give the Commission 

sufficient flexibility to respond to 

changing market and competitive 

conditions: 

The Committee recognizes that the rapidly 

changing marketplace dictates that effective 

regulation requires a certain amount of 

flexibility. Accordingly, the bill grants the 

SEC general exemptive authority under both 

the Securities Act and the Securities 

Exchange Act. This exemptive authority will 

allow the Commission the flexibility to 

explore and adopt new approaches to 

registration and disclosure. It will also enable 

the Commission to address issues relating to 

the securities markets more generally. For 

example, the SEC could deal with the 

regulatory concerns raised by the recent 

proliferation of electronic trading systems, 

which do not fit neatly into the existing 

regulatory framework.25

As noted above, in December 2008 the 

Commission exercised its Section 36 

exemptive authority to grant ISE a 

temporary exemption, subject to certain 

conditions, from the 19(b) rule filing 

requirements in connection with the 

Transaction.26 In 2004, the Commission 

granted similar exemptive relief in 

connection with the acquisition by The 

Nasdaq Stock Market, Inc. (‘‘Nasdaq’’) of 

Brut, LLC, the operator of the Brut 

ECN.27

Section 19(b)(1) of the Exchange Act 

requires a self-regulatory organization 

(‘‘self-regulatory organization’’ or 

‘‘SRO’’), including ISE, to file with the 

Commission its proposed rule changes 

accompanied by a concise general 

statement of the basis and purpose of 

the proposed rule change. Once a 

proposed rule change has been filed 

with the Commission, the Commission 

is required to publish notice of it and 

provide an opportunity for public 

comment. The proposed rule change 

may not take effect unless approved by 

the Commission by order, unless the 

rule change is within the class of rule 

changes that are effective upon filing 

pursuant to Section 19(b)(3)(A) of the 

Act.28

Section 19(b)(1) of the Exchange Act 

defines the term ‘‘proposed rule 

change’’ to mean ‘‘any proposed rule or 

rule change in, addition to, or deletion 

from the rules of [a] self-regulatory 

organization.’’ Pursuant to Section 

3(a)(27) and 3(a)(28) of the Exchange 

Act, the term ‘‘rules of a self-regulatory 

organization’’ means (1) the 

constitution, articles of incorporation, 

bylaws and rules, or instruments 

corresponding to the foregoing, of an 

SRO, and (2) such stated policies, 


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30336 Federal Register / Vol. 74, No. 121 / Thursday, June 25, 2009 / Notices 

29 17 CFR 240.19b–4(b). 30See Exemption Request at 1. As discussed 

above, ISE owns a 31.54% ownership interest in DE 

Holdings, the sole owner of Merger Sub. 31See Exemption Request at 2. 32 Id. 33 Id. 

34See Exemption Request at 2. 

35 In granting this relief, the Commission makes 

no finding regarding whether ISE’s operation of 

DECN as a facility would be consistent with the 

Exchange Act. 

36 In addition, the Commission notes that the 

rules governing the operation of the Exchange 

Subsidiaries will be subjected to public comment 

and Commission review and approval as part of the 

exchange registration process. 

37See Exemption Request at note 5. 

38 15 U.S.C. 78o. 

39 15 U.S.C. 78s. 

40See Section 19(b) of the Exchange Act and Rule 

19b–4 thereunder. The Commission notes that a 

material change would include, among other things, 

changes to DECN’s operating platform; the types of 

securities traded on DECN; DECN’s types of 

subscribers; or the reporting venue for trading that 

takes place on DECN. The Commission also notes 

that any rule filings must set forth the operation of 

the DECN facility sufficiently so that the 

Commission and the public are able to evaluate the 

proposed changes. 

41See Exemption Request at note 5. 

42 15 U.S.C. 78mm. 

practices and interpretations of an SRO 

(other than the Municipal Securities 

Rulemaking Board) as the Commission, 

by rule, may determine to be necessary 

or appropriate in the public interest or 

for the protection of investors to be 

deemed to be rules. Rule 19b–4(b) under 

the Exchange Act,29 defines the term 

‘‘stated policy, practice, or 

interpretation’’ to mean generally ‘‘any 

material aspect of the operation of the 

facilities of the self-regulatory 

organization or any statement made 

available to the membership, 

participants, or specified persons 

thereof that establishes or changes any 

standard, limit, or guideline with 

respect to rights and obligations of 

specified persons or the meaning, 

administration, or enforcement of an 

existing rule.’’ 

The term ‘‘facility’’ is defined in 

Section 3(a)(2) of the Exchange Act, 

with respect to an exchange, to include 

‘‘its premises, tangible or intangible 

property whether on the premises or 

not, any right to use such premises or 

property or any service thereof for the 

purpose of effecting or reporting a 

transaction on an exchange (including, 

among other things, any system of 

communication to or from the exchange, 

by ticker or otherwise, maintained by or 

with the consent of the exchange), and 

any right of the exchange to the use of 

any property or service.’’ 

In its Exemption Request, ISE 

acknowledges that since the Closing, 

Merger Sub has operated the Facility as 

a facility of ISE.30 Absent an exemption, 

Section 19(b) of the Exchange Act and 

Rule 19b–4 thereunder would require 

ISE to file proposed rules with the 

Commission to allow ISE to operate 

DECN as a facility of ISE. 

In its Exemption Request, ISE notes 

that the Exchange Subsidiaries have 

filed Form 1 Applications and that 

DECN intends to cease operations as an 

ECN shortly after any Commission 

approval of the Form 1 Applications 

and the Exchange Subsidiaries’ 

commencement of operations as 

national securities exchanges.31

Accordingly, ISE expects that DECN 

will continue to operate as a facility of 

ISE for a relatively brief period of 

time.32 ISE notes, in addition, that the 

Commission is reviewing the rules 

governing the operation of the Exchange 

Subsidiaries as part of its review of the 

Form 1 Applications.33 ISE represents 

that it has complied with the conditions 

in the Exemption Order and that it will 

continue to comply with these 

conditions during an extension of the 

relief granted in the Exemption Order.34

The Commission believes that it is 

appropriate to grant a temporary 

extension of the relief provided in the 

Exemption Order, subject to the 

conditions described below, to allow 

DECN to continue to operate as a facility 

of ISE without being subject to the rule 

filing requirements of Section 19(b) of 

the Exchange Act for a temporary 

period.35 Accordingly, the Commission 

has determined to grant ISE’s request for 

an extension of the relief provided in 

the Exemption Order, subject to certain 

conditions, for a period not to exceed 

180 days. The Commission finds that 

the temporary extended conditional 

exemption from the provisions of 

Section 19(b) of the Exchange Act is 

appropriate in the public interest and is 

consistent with the protection of 

investors. In particular, the Commission 

believes that the temporary extended 

exemption should help promote 

efficiency and competition in the 

market by allowing DECN to continue to 

operate as an ECN for a limited period 

of time while the Commission considers 

the Form 1 Applications. In this regard, 

the Commission notes ISE’s belief that 

it would be unduly burdensome and 

inefficient to require DECN’s operating 

rules to be separately subjected to the 

Section 19(b) rule filing and approval 

process because DECN will operate only 

temporarily as a facility of ISE while the 

Commission considers the Form 1 

Applications.36 To provide the 

Commission with the opportunity to 

review and act upon any proposal to 

change DECN’s fees or to make material 

changes to DECN’s operations as an ECN 

during the period covered by the 

extended temporary exemption, as well 

as to ensure that the Commission’s 

ability to monitor ISE and DECN is not 

diminished by the extended temporary 

exemption, the Commission is imposing 

the following conditions while the 

extended temporary exemption is in 

effect.37 The Commission believes such 

conditions are necessary and 

appropriate in the public interest for the 

protection of investors. Therefore, the 

Commission is granting to ISE an 

extended temporary exemption, 

pursuant to Section 36 of the Exchange 

Act, from the rule filing requirements 

imposed by Section 19(b) of the 

Exchange Act as set forth above, 

provided that ISE and DECN comply 

with the following conditions: 

(1) DECN remains a registered brokerdealer under Section 15 of the Exchange 

Act 38 and continues to operate as an 

ECN; 

(2) DECN operates in compliance with 

the obligations set forth under 

Regulation ATS; 

(3) DECN and ISE continue to operate 

as separate legal entities; 

(4) ISE files a proposed rule change 

under Section 19 of the Exchange Act 39

if any material changes are sought to be 

made to DECN’s operations. A material 

change would include any changes to a 

stated policy, practice, or interpretation 

regarding the operation of DECN or any 

other event or action relating to DECN 

that would require the filing of a 

proposed rule change by an SRO or an 

SRO facility; 40

(5) ISE files a proposed rule change 

under Section 19 of the Exchange Act if 

DECN’s fee schedule is sought to be 

modified; and 

(6) ISE treats DECN the same as other 

ECNs that participate in the Facility, 

and, in particular, ISE does not accord 

DECN preferential treatment in how 

DECN submits orders to the Facility or 

in the way its orders are displayed or 

executed.41

In addition, the Commission notes 

that the Financial Industry Regulatory 

Authority is currently the Designated 

Examining Authority for DECN. 

For the reasons discussed above, the 

Commission finds that the extended 

temporary conditional exemptive relief 

requested by ISE is appropriate in the 

public interest and is consistent with 

the protection of investors. 

It is ordered, pursuant to Section 36 

of the Exchange Act,42 that the 

application for an extended temporary 

conditional exemption is granted for a 


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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). 

6PRL orders are for a size within the standard 

unit (round-lot) of trading, which is 100 shares for 

most stocks, but contains a portion that is smaller 

than the standard unit of trading, e.g. 199 shares. 

It should be noted that for certain securities trading 

on the NYSE the standard unit of trading is 10 

shares. 

7See NYSE Rule 124(a). 

8 Id. Odd-lot orders are in effect netted against 

one another and executed; however, since the DMM 

is buying the same amount that he or she is selling, 

there is no economic consequence to the DMM in 

this type of pairing-off of orders. Any imbalance of 

buy or sell odd-lot market orders are executed 

against the DMM, up to the size of the round-lot 

transaction or the bid/offer size which ever is less. 

9The volume limitation in section (c) of the rule 

is defined as the lesser of either the number of 

shares in the last round-lot transaction or the 

number of shares available at the national best bid 

(in the case of an odd-lot order to sell), or the 

national best offer (in the case of an odd-lot order 

to buy). 

10Pursuant to NYSE Rule 124(d) odd-lot limit 

orders that are non-marketable upon receipt that 

become marketable are eligible to be netted and 

executed at the price of the next round-lot 

transaction. If an odd-lot limit order does not 

receive an execution pursuant to the netting 

provision, then the order is eligible to be executed, 

at its limit price, subject to the volume limitation 

of section (c) of the rule. 

11As with marketable odd-lot orders, nonmarketable odd-lot limit orders which would 

otherwise receive a partial execution will be 

executed in full. A non-marketable odd-lot limit 

order that becomes marketable, that remains 

unexecuted within 30 seconds of receipt will be 

executed, in time priority of receipt, except that the 

order will be executed at its limit price. 

period of 180 days, effective 

immediately. 

By the Commission. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–14967 Filed 6–24–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60138; File No. SR–NYSE– 

2009–45] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by New York 

Stock Exchange LLC Amending NYSE 

Rule 124 To Clarify the Pricing 

Methodology for the Odd-Lot Portion 

of a Part of a Round-Lot Order; Clarify 

the Systems Capable of Accepting PRL 

Orders; and Clarify the Systems 

Capable of Accepting a Good ’Til 

Cancelled Order During the 

Implementation of Exchange System 

Enhancements 

June 18, 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 June 8, 

2009, 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. NYSE 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: (i) Amend 

NYSE Rule 124 (Odd-Lot Orders) to 

clarify the pricing methodology for the 

odd-lot portion of a part of a round-lot 

(‘‘PRL’’) order; (ii) clarify the systems 

capable of accepting PRL orders; and 

(iii) clarify the systems capable of 

accepting a Good ’Til Cancelled Order 

(‘‘GTC’’) during the implementation of 

Exchange system enhancements. 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 

New York Stock Exchange LLC 

(‘‘NYSE’’ or the ‘‘Exchange’’) proposes 

to amend Exchange Rule 124 (Odd-Lot 

Orders) to clarify the: (i) Pricing 

methodology for the odd-lot portion of 

a part of a round-lot (‘‘PRL’’) 6 order; 

and (ii) systems capable of accepting 

PRL orders during the implementation 

of Exchange system enhancements. 

Background 

Currently, odd-lot orders on the 

Exchange are processed and executed 

systemically by an Exchange system 

designated solely for odd-lot orders (the 

‘‘Odd-lot System’’).7 The Odd-lot 

System executes all odd-lot orders 

against the Designated Marker Maker 

(‘‘DMM’’) as the contra party.8

Pursuant to NYSE Rule 124(c), after 

odd-lot market orders and marketable 

odd-lot limit orders are received by the 

Odd-lot System, they are automatically 

executed at the price of the next roundlot transaction in the subject security on 

the Exchange. Specifically, marketable 

odd-lot orders and marketable odd-lot 

limit orders are executed in time 

priority of receipt at the price of the 

next round-lot transaction, pursuant to 

the netting provision described in 

footnote 8. The imbalance of marketable 

odd-lot orders that do not receive an 

execution as a result of the netting 

provision are executed in time priority 

of receipt at the price of the National 

Best Bid or Offer (‘‘NBBO’’), subject to 

a volume limitation.9 Any imbalances of 

odd-lot limit orders that were nonmarketable upon receipt that 

subsequently become marketable 

receive an execution at their limit 

price.10 Marketable odd-lot orders, 

which would otherwise receive a partial 

execution pursuant to the volume 

limitation, are executed in full.11

Any marketable odd-lot orders that do 

not receive an execution because of the 

volume limitation are executed, in time 

priority of receipt at the price of the 

next round-lot transaction, following 

pricing and execution procedures 

described above. Marketable odd-lot 

orders (including odd-lot limit orders 

that were non-marketable upon receipt 

and subsequently become marketable) 

that remain unexecuted within 30 

seconds of receipt will be executed, in 

time priority of receipt, at the price of 

the NBBO (or at its limit price if the 

order is a non-marketable odd-lot limit 

order upon receipt that has become 

marketable). These orders are also 

subject to the volume limitation. 

Marketable odd-lot orders and nonmarketable odd-lot limit orders that 

have become marketable and remain 

unexecuted prior to the close of trading 

shall be executed, in time priority of 

receipt at the price of the closing 

transaction, subject to the netting 

provision and a volume restriction 

which is not to exceed the size of the 

closing transaction. 


sroberts on PROD1PC70 with NOTICES