32660 Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notices 

16 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). 

6Each ETP Holder is assigned an ETP ID which 

is used as a firm identifier within Exchange 

systems. 

those that may be withheld from the 

public in accordance with the 

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

available for inspection and copying in 

the Commission’s Public Reference 

Room, 100 F Street, NE., Washington, 

DC 20549, on official business days 

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

Copies of the filing will also be available 

for inspection and copying at the 

principal office of the self-regulatory 

organization. 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– 

NASDAQ–2009–056 and should be 

submitted on or before July 29, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.16

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–15991 Filed 7–7–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60191; File No. SR– 

NYSEArca–2009–58] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change Amending NYSE Arca 

Equities Rule 7.31 

June 30, 2009. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on June 24, 

2009, NYSE Arca, Inc. (‘‘NYSE Arca’’ 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 Arca filed the proposed rule 

change as a ‘‘non-controversial’’ 

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

of the Act 4 and Rule 19b–4(f)(6) 

thereunder,5 which renders the proposal 

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 Arca Equities Rule 7.31. A copy 

of this filing is available on the 

Exchange’s Web site at http:// 

www.nyse.com, at the Exchange’s 

principal office and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

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 purpose of this rule filing is to 

add Self-Trade Prevention (‘‘STP’’) 

modifiers to NYSE Arca Equities Rule 

7.31. The proposed STP modifiers are 

designed to prevent two orders with the 

same ETP ID from executing against 

each other. The Exchange proposes 

adding four STP modifiers that will be 

implemented and made available at the 

Equity Trading Permit ID (‘‘ETP ID’’) 

level.6 The STP modifiers will not be 

automatically implemented across all 

ETP ID’s, but rather ETP Holders must 

elect to designate each order with one 

of the STP modifiers. The STP modifier 

on the incoming order controls the 

interaction between two orders marked 

with STP modifiers. The four new STP 

modifiers are discussed more 

thoroughly below. 

STP Cancel Newest (‘‘STPN’’) 

An incoming order marked with the 

STPN modifier will not execute against 

opposite side resting interest marked 

with any of the STP modifiers from the 

same ETP ID. The incoming order 

marked with the STPN modifier will be 

cancelled back to the originating ETP 

Holder. The resting order marked with 

one of the STP modifiers, which 

otherwise would have interacted with 

the incoming order by the same ETP 

Holder, will remain on the NYSE Arca 

Book. 

STPN Example 1: An order to buy 500 

shares @ $22.00 is marked with any of the 

four STP modifiers and becomes a resting 

order in the NYSE Arca Book. Subsequently, 

an order to sell 500 shares @ $22.00 is 

entered with the same ETP ID and marked 

with the STPN modifier. 

STPN Result 1: The incoming sell order for 

500 shares @ $22.00 marked with the STPN 

modifier is cancelled back to the originating 

ETP Holder. The resting buy order for 500 

shares at $22.00 marked one of the four STP 

modifiers remains on the NYSE Arca Book. 

STPN Example 2: An order to buy 500 

shares @ $22.00 is marked with any of the 

four STP modifiers and becomes a resting 

order in the NYSE Arca Book. Subsequently, 

an order to sell 700 shares @ $22.00 is 

entered with the same ETP ID and marked 

with the STPN modifier. 

STPN Result 2: The incoming sell order for 

700 shares @ $22.00 marked with the STPN 

modifier is cancelled back to the originating 

ETP Holder. The resting buy order for 500 

shares at $22.00 marked one of the four STP 

modifiers remains on the NYSE Arca Book. 

STPN Example 3: An order to buy 500 

shares @ $22.00 is marked with any of the 

four STP modifiers and becomes a resting 

order in the NYSE Arca Book. Subsequently, 

an order to sell 400 shares @ $22.00 is 

entered with the same ETP ID and marked 

with the STPN modifier. 

STPN Result 3: The incoming sell order for 

400 shares @ $22.00 marked with the STPN 

modifier is cancelled back to the originating 

ETP Holder. The resting buy order for 500 

shares at $22.00 marked one of the four STP 

modifiers remains on the NYSE Arca Book. 

STP Cancel Oldest (‘‘STPO’’) 

An incoming order marked with the 

STPO modifier will not execute against 

opposite side resting interest marked 

with any of the STP modifiers from the 

same ETP ID. The resting order marked 

with any of the STP modifiers, which 

otherwise would have interacted with 

the incoming order by the same ETP 

Holder, will be cancelled back to the 

originating ETP Holder. The incoming 

order marked with the STPO modifier 

will remain on the NYSE Arca Book. 

STPO Example 1: An order to buy 500 

shares @ $22.00 is marked with any of the 

four STP modifiers and becomes a resting 

order in the NYSE Arca Book. Subsequently, 

an order to sell 500 shares @ $22.00 is 

entered with the same ETP ID and marked 

with the STPO modifier. 

STPO Result 1: The resting buy order for 

500 shares at $22.00 marked with one of the 

four STP modifiers is cancelled back to the 

originating ETP Holder. The incoming sell 

order for 500 shares @ $22.00 marked with 

the STPO modifier is entered in the NYSE 

Arca Book. 

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Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notices 32661 

STPO Example 2: An order to buy 500 

shares @ $22.00 is marked with any of the 

four STP modifiers and becomes a resting 

order in the NYSE Arca Book. Subsequently, 

an order to sell 700 shares @ $22.00 is 

entered with the same ETP ID and marked 

with the STPO modifier. 

STPO Result 2: The resting buy order for 

500 shares at $22.00 marked with one of the 

four STP modifiers is cancelled back to the 

originating ETP Holder. The incoming sell 

order for 700 shares @ $22.00 marked with 

the STPO modifier is entered on the NYSE 

Arca Book. 

STPO Example 3: An order to buy 500 

shares @ $22.00 is marked with any of the 

four STP modifiers and becomes a resting 

order in the NYSE Arca Book. Subsequently, 

an order to sell 400 shares @ $22.00 is 

entered with the same ETP ID and marked 

with the STPO modifier. 

STPO Result 3: The resting buy order for 

500 shares at $22.00 marked with one of the 

four STP modifiers is cancelled back to the 

originating ETP Holder. The incoming sell 

order for 400 shares @ $22.00 marked with 

the STPN modifier entered on the NYSE Arca 

Book. 

STP Decrement and Cancel (‘‘STPD’’) 

An incoming order marked with the 

STPD modifier will not execute against 

opposite side resting interest marked 

with any of the STP modifiers from the 

same ETP ID. If both orders are 

equivalent in size, both orders will be 

cancelled back to the originating ETP 

Holders. If the orders are not equivalent 

in size, the equivalent size will be 

cancelled back to the originating ETP 

Holders and the larger order will be 

decremented by the size of the smaller 

order with the balance remaining on the 

NYSE Arca Book. 

STPD Example 1: An order to buy 500 

shares @ $22.00 is marked with any of the 

four STP modifiers and becomes a resting 

order in the NYSE Arca Book. Subsequently, 

an order to sell 500 shares @ $22.00 is 

entered with the same ETP ID and marked 

with the STPD modifier. 

STPD Result 1: The resting buy order for 

500 shares at $22.00 marked with one of the 

four STP modifiers is cancelled back to the 

originating ETP Holder. The incoming sell 

order for 500 shares @ $22.00 marked with 

the STPD modifier is cancelled back to the 

originating ETP Holder. 

STPD Example 2: An order to buy 500 

shares @ $22.00 is marked with any of the 

four STP modifiers and becomes a resting 

order in the NYSE Arca Book. Subsequently, 

an order to sell 700 shares @ $22.00 is 

entered with the same ETP ID and marked 

with the STPD modifier. 

STPD Result 2: The resting buy order for 

500 shares at $22.00 marked with one of the 

four STP modifiers is cancelled back to the 

originating ETP Holder. The equivalent 

portion, 500 shares, of the incoming sell 

order marked with the STPD modifier is 

cancelled back to the originating ETP Holder. 

The remaining portion, 200 shares, is entered 

on the NYSE Arca Book. 

STPD Example 3: An order to buy 500 

shares @ $22.00 is marked with any of the 

four STP modifiers and becomes a resting 

order in the NYSE Arca Book. Subsequently, 

an order to sell 400 shares @ $22.00 is 

entered with the same ETP ID and marked 

with the STPD modifier. 

STPD Result 3: 400 of the 500 shares on the 

resting buy order at $22.00 marked with one 

of the four STP modifiers is cancelled back 

to the originating ETP Holder. The 

outstanding 100 shares remain on the NYSE 

Arca Book. The incoming sell order for 400 

shares @ $22.00 marked with the STPD 

modifier is cancelled back to the originating 

ETP Holder. 

STP Cancel Both (‘‘STPC’’) 

An incoming order marked with the 

STPC modifier will not execute against 

opposite side resting interest marked 

with any of the STP modifiers from the 

same ETP ID. The entire size of both 

orders will be cancelled back to 

originating ETP Holder. 

STPC Example 1: An order to buy 500 

shares @ $22.00 is marked with any of the 

four STP modifiers and becomes a resting 

order in the NYSE Arca Book. Subsequently, 

an order to sell 500 shares @ $22.00 is 

entered with the same ETP ID and marked 

with the STPC modifier. 

STPC Result 1: The resting buy order for 

500 shares at $22.00 marked with one of the 

four STP modifiers is cancelled back to the 

originating ETP Holder. The incoming sell 

order for 500 shares @ $22.00 marked with 

the STPC modifier is cancelled back to the 

originating ETP Holder. 

STPC Example 2: An order to buy 500 

shares @ $22.00 is marked with any of the 

four STP modifiers and becomes a resting 

order in the NYSE Arca Book. Subsequently, 

an order to sell 700 shares @ $22.00 is 

entered with the same ETP ID and marked 

with the STPC modifier. 

STPC Result 2: The resting buy order for 

500 shares at $22.00 marked with one of the 

four STP modifiers is cancelled back to the 

originating ETP Holder. The incoming order 

to sell 700 shares @ $22.00 marked with the 

STPC modifier is cancelled back to the 

originating ETP Holder. 

STPC Example 3: An order to buy 500 

shares @ $22.00 is marked with any of the 

four STP modifiers and becomes a resting 

order in the NYSE Arca Book. Subsequently, 

an order to sell 400 shares @ $22.00 is 

entered with the same ETP ID and marked 

with the STPC modifier. 

STPC Result 3: The resting buy order for 

500 shares at $22.00 marked with one of the 

four STP modifiers is cancelled back to the 

originating ETP Holder. The incoming order 

to sell 400 shares @ $22.00 marked with the 

STPC modifier is cancelled back to the 

originating ETP Holder. 

STP modifiers are intended to prevent 

interaction between the same ETP ID. 

STP modifiers must be present on both 

the buy and the sell order in order to 

prevent a trade from occurring and to 

effect a cancel instruction. STP 

modifiers are available for orders 

entered in either an agency or principal 

capacity. An incoming STP order cannot 

cancel through resting orders that have 

price and/or time priority. When an 

order with an STP modifier is entered 

it will first interact will all available 

interest in accordance with the Order 

Ranking and Display process pursuant 

to Exchange Rule 7.36. If there is a 

remaining balance on the order after 

trading with all orders with higher 

priority, it may then interact with an 

opposite side STP order in accordance 

with the rules established above. In 

situations where there are multiple STP 

orders resting in the NYSE Arca Book, 

an incoming STP order interacts only 

with the first resting STP order that it 

encounters. Incoming STP orders that 

are priced through the price of a resting 

STP order may cancel the resting order 

as long as no other non-STP orders have 

priority. Additionally, orders marked 

with one of the STP modifiers will not 

be prevented from interacting during 

any Auction process as defined by Rule 

7.35. 

The Exchange believes that adding 

this functionality will allow firms to 

better manage order flow and prevent 

undesirable executions with themselves 

or the potential for (or the appearance 

of) ‘‘wash sales’’ that may occur as a 

result of the velocity of trading in 

today’s high speed marketplace. 

Commonly ETP Holders have multiple 

connections into the Exchange due to 

capacity and speed related demands. 

Orders routed by the same ETP Holder 

via different connections may, in certain 

circumstances, trade against each other. 

The new STP modifiers provide ETP 

Holders the opportunity to prevent 

these potentially undesirable trades 

occurring under the same ETP ID on 

both the buy and sell side of the 

execution. The Exchange also believes 

that this functionality will allow firms 

to better internalize agency order flow 

which in turn may decrease the costs to 

its customers. The Exchange notes that 

the STP modifiers do not alleviate, or 

otherwise exempt, broker-dealers from 

their best execution obligations. As 

such, broker-dealers using the STP 

modifiers will be obligated to internally 

cross agency orders at the same price, or 

a better price than they would have 

received had the orders been executed 

on the Exchange. Additionally, the STP 

modifiers will assist market participants 

in complying with certain rules and 

regulations of the Employee Retirement 

Income Security Act (‘‘ERISA’’) that 

preclude and/or limit managing brokerdealers of such accounts from trading as 

principal with orders generated for 

those accounts. Finally, the Exchange 

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32662 Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notices 

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

8 15 U.S.C. 78f(b)(5). 

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

10 17 CFR 240.19b-4(f)(6). In addition, Rule 19b4(f)(6)(iii) requires a self-regulatory organization to 

provide the Commission with written 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 fulfilled this requirement. 

11For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 12 17 CFR 200.30–3(a)(12). 

notes that offering the STP modifiers 

will streamline certain regulatory 

functions by reducing false positive 

results that may occur on Exchange 

generated wash trading surveillance 

reports when orders are executed under 

the same ETP ID. For these reasons, the 

Exchange believes the STP modifiers 

offer users enhanced order processing 

functionality that may prevent 

potentially undesirable executions 

without negatively impacting broker 

dealer best execution obligations. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) 7 of the 

Securities Exchange Act of 1934 (the 

‘‘Exchange Act’’), in general, and 

furthers the objectives of Section 

6(b)(5) 8 in particular in that it is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, 

and to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system. This functionality will allow 

firms to better manage order flow and 

prevent undesirable executions against 

themselves. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

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 

this 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 9 and Rule 

19b-4(f)(6) thereunder.10

A proposed rule change filed under 

Rule 19b-4(f)(6) normally does not 

become operative for 30 days after the 

date of filing. However, Rule 19b4(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 requests that the Commission 

waive the 30-day operative delay so that 

the benefits of this functionality to 

NYSE Arca market participants 

expected from the rule change will not 

be delayed. The Commission believes 

that waiving the 30-day operative delay 

to make this functionality available 

without delay is consistent with the 

protection of investors and the public 

interest. Therefore, the Commission 

designates the proposal operative upon 

filing.11

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–NYSEArca–2009–58 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–NYSEArca-2009–58. This 

file number should be included on the 

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

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for inspection and copying in 

the Commission’s Public Reference 

Room, 100 F Street, NE., Washington, 

DC 20549, on official business days 

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

Copies of the filing also will be available 

for inspection and copying at the 

principal office of the Exchange. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–NYSEArca–2009–58 and 

should be submitted on or before July 

29, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.12

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–15993 Filed 7–7–09; 8:45 am] 

BILLING CODE 8010–01–P 

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